[Federal Register Volume 59, Number 116 (Friday, June 17, 1994)]
[Unknown Section]
[Page 0]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 94-14850]


[[Page Unknown]]

[Federal Register: June 17, 1994]


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DEPARTMENT OF COMMERCE
International Trade Administration
[A-351-824]

 

Notice of Preliminary Determination of Sales at Less Than Fair 
Value and Postponement of Final Determination: Silicomanganese from 
Brazil

AGENCY: Import Administration, International Trade Administration, 
Department of Commerce.

EFFECTIVE DATE: June 17, 1994.

FOR FURTHER INFORMATION CONTACT: Lori Way or Stephen Alley, Office of
Antidumping Investigations, Import Administration, U.S. Department of 
Commerce, 14th Street and Constitution Avenue NW., Washington, DC 
20230; telephone (202) 482-0656 or 482-5288, respectively.

Preliminary Determination:

    We preliminarily determine that silicomanganese from Brazil is 
being, or is likely to be, sold in the United States at less than fair 
value, as provided in section 733 of the Tariff Act of 1930, as amended 
(the Act). The estimated margins are shown in the ``Suspension of 
Liquidation'' section of this notice.

Case History

    Since the initiation of this investigation on December 2, 1993 (58 
FR 64553, December 8, 1993), the following events have occurred.
    On December 27, 1993, the U.S. International Trade Commission (ITC) 
issued an affirmative preliminary determination in this case (see USITC 
Publication 2714, December, 1993).
    We issued the antidumping questionnaire on January 18, 1994, to 
Companhia Paulista de Ferro-Ligas and Sibra-Eletrosiderurgica 
Brasileira S/A (collectively, ``Paulista''). On January 24, 1994, 
representatives of the Department of Commerce (the Department) met with 
Paulista officials in Brazil to provide further explanation of the 
antidumping questionnaire and to answer outstanding technical and 
procedural questions.
    Responses to the questionnaire were received on February 4, 1994, 
and March 7, 1994. Petitioners in this investigation, Elkem Metals 
Company and the Oil, Chemical & Atomic Workers, Local 3-639, submitted 
comments regarding deficiencies in Paulista's questionnaire responses 
on March 17 and 18, 1994. A supplemental questionnaire was issued on 
March 28, 1994. Paulista submitted responses to this questionnaire in 
April and May, 1994.
    On February 2 and 8, 1994, Paulista asked the Department to amend 
the product matching criteria included in Appendix V of its 
questionnaire. Petitioners submitted comments on Paulista's request on 
February 7 and 9, 1994. On February 10, 1994, we amended Appendix V 
with respect to the silicon content and sieve size categories (see 
letter from Gary Taverman to Dorsey & Whitney, dated February 10, 1994, 
on file in Room B-099 of the main building of the Department of 
Commerce).
    At the request of petitioners, on March 30, 1994, the Department 
postponed its preliminary determination until no later than June 10, 
1994 (59 FR 16177, April 6, 1994).
    On May 13, 1994, based on petitioners' March 14, 1994, allegation 
of sales below cost of production (COP), the Department initiated a COP 
investigation (see decision memorandum from Richard Moreland to Barbara 
Stafford, dated May 13, 1994) and issued a COP questionnaire. However, 
because of the deadline established for Paulista's COP questionnaire 
response, this information could not be considered for the preliminary 
determination. It will be considered for the final determination.

Postponement of Final Determination

    Pursuant to section 735(a)(2)(A) of the Act, on April 26, 1994, 
Paulista requested that, in the event of an affirmative preliminary 
determination in this investigation, the Department postpone its final 
determination to 135 days after the date of publication of an 
affirmative preliminary determination. Pursuant to 19 CFR 353.20(b), if 
our preliminary determination is affirmative, and the Department 
receives a request from producers or resellers who account for a 
significant portion of the exports under investigation, we will, absent 
compelling reasons for denial, grant the request. Because Paulista 
represents a significant portion of the exports under investigation and 
there are no compelling reasons to deny the request, we are postponing 
the final determination until the 135th day after the date of 
publication of this notice in the Federal Register.

Scope of Investigation

    The merchandise covered by this investigation is silicomanganese. 
Silicomanganese, which is sometimes called ferrosilicon manganese, is a 
ferroalloy composed principally of manganese, silicon, and iron, and 
normally containing much smaller proportions of minor elements, such as 
carbon, phosphorous and sulfur. Silicomanganese generally contains by 
weight not less than 4% iron, more than 30% manganese, more than 8% 
silicon and not more than 3% phosphorous. All compositions, forms and 
sizes of silicomanganese are included within the scope of this 
investigation, including silicomanganese slag, fines and briquettes. 
Silicomanganese is used primarily in steel production as a source of 
both silicon and manganese. This investigation covers all 
silicomanganese, regardless of its tariff classification. Most 
silicomanganese is currently classifiable under subheading 7202.30.0000 
of the Harmonized Tariff Schedule of the United States (HTS). Some 
silicomanganese may also be classifiable under HTS subheading 
7202.99.5040. Although the HTS subheading is provided for convenience 
and customs purposes, our written description of the scope of this 
proceeding is dispositive.

Period of Investigation

    The period of investigation (POI) is June 1, 1993, through November 
30, 1993.

Such or Similar Comparisons

    We have determined that the class or kind of merchandise subject to 
this investigation constitutes two such or similar categories: 
silicomanganese lumps and silicomanganese fines. In making our fair 
value comparisons, in accordance with the Department's standard 
methodology, we first compared identical merchandise. Where there were 
no sales of identical merchandise in the home market to compare to U.S. 
sales, we made similar merchandise comparisons on the basis of the 
criteria defined in Appendix V to the antidumping duty questionnaire. 
In accordance with 19 CFR 353.58, the Department normally attempts to 
compare U.S. sales to home market sales made at the same level of 
trade, where possible. Because Paulista did not make sales at the same 
level of trade in Brazil and the United States, we made comparisons 
without regard to level of trade.

Fair Value Comparisons

    To determine whether Paulista's sales of silicomanganese from 
Brazil to the United States were made at less than fair value, we 
compared the United States price (USP) to the foreign market value 
(FMV), as specified in the ``United States Price'' and ``Foreign Market 
Value'' sections of this notice.

United States Price

    In accordance with section 772(b) of the Act, we based USP for 
Paulista on purchase price because all sales were made to unrelated 
parties prior to importation into the United States.
    We calculated purchase price sales based on prices to unrelated 
customers in the United States. We made deductions, where appropriate, 
for foreign brokerage, handling and foreign inland freight in order to 
adjust these prices to an ex-factory basis. We did not add an amount 
for interest revenue because Paulista failed to place adequate 
information on the record to support this adjustment (see concurrence 
memorandum, dated June 3, 1994). We will, however, examine
this issue further at verification, and consider it for the final 
determination.
    On October 7, 1993, the Court of International Trade (CIT), in 
Federal-Mogul Corp. and The Torrington Co. v. United States, Slip Op. 
93-194 (CIT, October 7, 1993), rejected the Department's methodology 
for calculating an addition to USP under section 772(d)(1)(C) of the 
Act to account for taxes that the exporting country would have assessed 
on the merchandise had it been sold in the home market. The CIT held 
that the addition to USP under section 772(d)(1)(C) of the Act should 
be the result of applying the foreign market tax rate to the price of 
the United States merchandise at the same point in the chain of 
commerce that the foreign market tax was applied to foreign market 
sales. Federal- Mogul, Slip Op. 93-194 at 12.
    In accordance with the Federal-Mogul decision, we have added to USP 
the product of the home market tax rate and the price of the United 
States merchandise at the same point in the chain of commerce that the 
home market tax was applied to foreign market sales. We have also 
deducted from the USP and the FMV those portions of the home market tax 
and the USP tax adjustments attributable to expenses included in the 
home market and United States bases of the tax if those expenses are 
later deducted to calculate FMV and USP. These adjustments to the home 
market tax and the USP tax adjustment are necessary to prevent the 
methodology for calculating the USP tax adjustment from creating 
antidumping duty margins where no margins would exist if no taxes were 
levied upon foreign market sales.
    This margin creation effect is due to the fact that the basis for 
calculating both the amount of tax included in the price of the foreign 
market merchandise and the amount of the USP tax adjustment include 
many expenses that are later deducted when calculating USP and FMV. 
After these deductions are made, the tax included in FMV and the USP 
tax adjustment still reflect the inclusion of these expenses in the 
bases. Thus, a margin may be created that is not dependent upon a 
difference between adjusted USP and FMV, but is the result of 
differences between the expenses in the United States and the home 
market that were deducted through adjustments.
    This adjustment to avoid the margin creation effect is in 
accordance with court decisions. The United States Court of Appeals has 
held that the application of the USP tax adjustment under section 
772(d)(1)(C) of the Act should not create an antidumping duty margin if 
pre-tax FMV does not exceed USP. Zenith Electronics Corp. v. United 
States, 988 F.2d 1573, 1581 (Fed. Cir. 1993). In addition, the CIT has 
specifically held that an adjustment should be made to mitigate the 
impact of expenses that are deducted from FMV and USP upon the USP tax 
adjustment and the amount of tax included in FMV. Daewoo Electronics 
Co., Ltd. v. United States, 760 F. Supp. 200, 208 (CIT, 1991). However, 
the mechanics of the Department's adjustments to the USP tax adjustment 
and the foreign market tax amount as described above are not identical 
to those suggested in Daewoo.
    In this investigation, we added to USP an amount for value added 
tax that would have been paid had the U.S. sale not been exported. In 
Brazil, there are four different taxes levied on sales of the subject 
merchandise in the home market which are not levied on export sales:
    (1) Imposto sobre a Circulacao de Mercadorias e Servicos (ICMS), a 
regional tax with a rate that varies depending upon the state in which 
the purchase originates;
    (2) Imposto sobre Produtos Industrializados (IPI), the Federal 
value-added tax which is levied at a rate of four percent;
    (3) Programa de Integracao Social (PIS), a social integration 
program tax which is levied at a rate of 0.65 percent; and
    (4) Contribuicao do Fim Social (CONFINS), a social investment fund 
tax which is levied at a rate of 2.0 percent.

Foreign Market Value

    In order to determine whether there was a sufficient volume of 
sales in the home market to serve as a viable basis for calculating 
FMV, we compared the volume of home market sales of subject merchandise 
to the volume of third country sales of subject merchandise, in 
accordance with section 773(a)(1)(B) of the Act. Since the total volume 
of merchandise sold by Paulista in Brazil during the POI was greater 
than five percent of the aggregate volume of third country sales for 
each such or similar category, we determined that the home market was 
viable. Therefore, we based FMV on home market sales for both 
silicomanganese lumps and silicomanganese fines, in accordance with 19 
CFR 353.48(a). We excluded from our analysis sales to a related 
customer that were not claimed by Paulista to be at arm's length.
    We calculated FMV based on prices to unrelated customers. In light 
of the Court of Appeals for the Federal Circuit's (CAFC) decision in Ad 
Hoc Committee of AZ-NM-TX-FL Producers of Gray Portland Cement v. 
United States, Slip Op. 93-1239 (Fed. Cir., January 5, 1994), the 
Department no longer deducts home market movement charges from FMV 
pursuant to its inherent authority to fill in gaps in the antidumping 
statute. We instead adjust for those expenses under the circumstance of 
sale provision of 19 CFR 353.56 and the exporter's sales price offset 
provision of 19 CFR 353.56(b) (1) and (2), as appropriate.
    Accordingly, in the present case, we made circumstance of sale 
adjustments for certain post-sale home market movement charges under 19 
CFR 353.56. Also pursuant to 19 CFR 353.56(a)(2), we made circumstance 
of sale adjustments, where appropriate, for differences in credit 
expenses, warehousing, sampling-weighing-testing expenses, and bank 
fees. In accordance with 19 CFR 353.56(b), we added commissions paid on 
U.S. sales and deducted indirect selling expenses incurred on sales in 
Brazil up to the amount of the U.S. commission.
    Under our past practice, if the Department determines that a 
country is hyperinflationary, we calculate FMVs on a monthly basis to 
eliminate the distortive effects of inflation (see, Final Determination 
of Sales at Less Than Fair Value and Amended Antidumping Duty Order, 
Tubeless Steel Disc Wheels from Brazil, 53 FR 34566, September 7, 
1988). An economy is deemed to be hyperinflationary if its monthly 
inflation rate is greater than 5 percent or if its annual inflation 
rate is greater than 60 percent. We determined that Brazil's economy 
was hyper-inflationary during the POI. Brazil's inflation rate was over 
60 percent during 1993.
    We included in FMV the amount of the VAT collected in the home 
market (i.e., the sum of the actual IPI, PIS and CONFINS tax rates plus 
the weighted-average ICMS rate). However, we calculated the amount of 
tax that was due solely to the inclusion of price deductions in the 
original tax base (i.e., the sum of any adjustments, expenses, and 
charges that were deducted from the tax base). See the ``United States 
Price'' section of this notice, above. This amount was deducted from 
the FMV after all other additions and deductions had been made.

Cost of Production

    Based on petitioner's allegations, and in accordance with section 
773(b) of the Act, the Department initiated an investigation to 
determine whether Paulista made home market sales at prices below its 
COP over an extended period of time, which would not permit the 
recovery of costs within a reasonable period of time. However, 
Paulista's COP questionnaire response is due on June 16, 1994, which is 
after the deadline for the preliminary determination. The response 
will, however, be considered for the final determination.

Currency Conversion

    No certified rates of exchange, as furnished by the Federal Reserve 
Bank of New York, were available for the POI. In place of the official 
certified rates, we used the daily official exchange rates for 
Brazilian currency published by the Central Bank of Brazil.
    In hyperinflationary economies, the Department normally converts 
movement charges for U.S. sales on the date that these charges become 
payable, and we have done so in this investigation.

Verification

    As provided in section 776(b) of the Act, we will verify the 
accuracy of all information used in making our final determination.

Suspension of Liquidation

    In accordance with section 733(d)(1) of the Act, we are directing 
the Customs Service to suspend liquidation of all entries of 
silicomanganese from Brazil that are entered, or withdrawn from 
warehouse, for consumption on or after the date of publication of this 
notice in the Federal Register. The Customs Service shall require a 
cash deposit or posting of a bond equal to the estimated preliminary 
dumping margins as shown below. This suspension of liquidation will 
remain in effect until further notice. The estimated preliminary 
dumping margins are as follows: 

------------------------------------------------------------------------
                                                              Weighted- 
                                                               average  
               Manufacturer/producer/exporter                   margin  
                                                             percentages
                                                                        
------------------------------------------------------------------------
Paulista...................................................        37.76
All others.................................................       37.76 
------------------------------------------------------------------------

ITC Notification

    In accordance with section 733(f) of the Act, we have notified the 
ITC of our determination. If our final determination is affirmative, 
the ITC will determine before the later of 120 days after the date of 
the preliminary determination or 45 days after our final determination 
whether imports of the subject merchandise are materially injuring, or 
threaten material injury to, the U.S. industry.

Public Comment

    Interested parties who wish to request a hearing must submit a 
written request to the Assistant Secretary for Import Administration, 
U.S. Department of Commerce, Room B-099, within ten days of the 
publication of this notice. Requests should contain: (1) The party's 
name, address, and telephone number; (2) the number of participants; 
and (3) a list of the issues to be discussed.
    In accordance with 19 CFR 353.38, case briefs or other written 
comments in at least ten copies must be submitted to the Assistant 
Secretary for Import Administration no later than September 23, 1994, 
and rebuttal briefs no later than September 28, 1994. A public hearing, 
if requested, will be held on September 30, 1994, at 10 a.m. at the 
U.S. Department of Commerce, Room 4830, 14th Street and Constitution 
Avenue NW., Washington, DC 20230. Parties should confirm by telephone 
the time, date, and place of the hearing 48 hours before the scheduled 
time. In accordance with 19 CFR 353.38(b), oral presentations will be 
limited to issues raised in the briefs.
    We will make our final determination not later than 135 days after 
publication of this determination in the Federal Register.
    This determination is published pursuant to section 733(f) of the 
Act, and 19 CFR 353.15(a)(4).

    Dated: June 10, 1994.
Susan G. Esserman,
Assistant Secretary for Import Administration.
[FR Doc. 94-14850 Filed 6-16-94; 8:45 am]
BILLING CODE 3510-DS-P