[Federal Register Volume 61, Number 173 (Thursday, September 5, 1996)]
[Notices]
[Pages 46763-46776]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-22679]


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DEPARTMENT OF COMMERCE
International Trade Administration
[A-351-806]


Silicon Metal from Brazil; Final Results of Antidumping Duty 
Administration Review

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

ACTION: Notice of Final Results of Antidumping Duty Administrative 
Review.

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SUMMARY: On March 20, 1995, the Department of Commerce published the 
preliminary results of its administrative review of the antidumping 
duty order on silicon metal from Brazil. The review period is July 1, 
1992, through June 30, 1993. The review covers four manufacturers/
exporters. The review indicates the existence of margins for two firms.
    We gave interested parties an opportunity to comment on the 
preliminary results. Based on our analysis of the comments received, we 
have changed our results from those presented in our preliminary 
results as described below in the comments section of this notice.

EFFECTIVE DATE: September 5, 1996.

FOR FURTHER INFORMATION CONTACT:
Fred Baker or John Kugelman, Import Administration, International Trade 
Administration, U.S. Department of Commerce, 14th Street and 
Constitution Avenue, N.W., Washington, D.C. 20230; telephone: (202) 
482-5253.

SUPPLEMENTARY INFORMATION:

Background

    On March 20, 1995, the Department of Commerce (the Department) 
published in the Federal Register (60 FR 14731) the preliminary results 
of its administrative review of the antidumping duty order on silicon 
metal from Brazil (July 31, 1991, 56 FR 36135).

Applicable Statute and Regulations

    The Department has now completed that administrative review in 
accordance with section 751 of the Tariff Act of 1930, as amended (the 
Tariff Act). Unless otherwise indicated, all citations to the statute 
and the Department's regulations are in reference to the provisions as 
they existed on December 31, 1994.

Scope of the 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 a higher aluminum content 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 2804.50 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 the product coverage.
    The period of review (POR) is July 1, 1992, through June 30, 1993. 
This review involves four manufacturers/exporters of Brazilian silicon 
metal; Companhia Brasileira Carburetto de Calcio (CBCC), Companhia 
Ferroligas Minas Gerais--Minasligas (Minasligas), Eletroila, S.A. 
(currently known as Eletrosilex Belo Horizonte (Eletrosilex)), and Rima 
Electrometalurgia S.A. (RIMA).

Compsumption Tax

    In light of the Federal Circuit's decision in Federal Mogul v. 
United States, CAFC No. 94-1097, the

[[Page 46764]]

Department has changed its treatment of home market consumption taxes. 
Where merchandise exported to the United States is exempt from the 
consumption tax, the Department will add to the U.S. price the absolute 
amount of such taxes charged on the comparison sales in the home 
market. This is the same methodology that the Department adopted 
following the decision of the Federal Circuit in Zenith v. United 
States, 988 F. 2d 1573, 1582 (1993), and which was suggested by the 
court in footnote 4 of its decision. The Court of International Trade 
(CIT) overturned this methodology in Federal Mogul v. United States 834 
F. Supp. 1391 (1993), and the Department acquiesced in the CIT's 
decision. The Department then followed the CIT's preferred methodology, 
which was to calculate the tax to be added to U.S. price by multiplying 
the adjusted U.S. price by the foreign market tax rate; the Department 
made adjustments to his amount so that the tax adjustment would not 
alter a ``zero'' per-tax dumping assessment.
    The foreign exporters in the Federal Mogul case, however, appealed 
that decision to the Federal Circuit, which reversed the CIT and held 
that the statute did not preclude Commerce from using the ``Zenith 
footnote 4'' methodology to calculate tax-neutral dumping assessments 
(i.e., assessments that are unaffected by the existence amount of home 
market consumption taxes). Moreover, the Federal Circuit recognized 
that certain international agreements of the United States, in 
particular the General Agreement on Tariffs and Trade (GATT) and the 
Tokyo Round Antidumping Code, required the calculation of tax-neutral 
dumping assessments. The Federal Circuit remanded the case to the CIT 
with instructions to direct Commerce to determine which tax methodology 
it will employ.
    The Department has determined that the ``Zenith footnote 4'' 
methodology should be used. First, as the Department has explained in 
numerous administrative determinations and court filings over the past 
decade, and as the Federal Circuit has now recognized, Article VI of 
the GATT and Article 2 of the Tokyo Round Antidumping Code required 
that dumping assessments be tax- neutral. This requirement continues 
under the new Agreement on Implementation of Article VI of the General 
Agreement on Tariffs and Trade. Second, the Uruguay Round Agreements 
Act (URAA) explicitly amended the antidumping law to remove consumption 
taxes from the home market price and to eliminate the addition of taxes 
to U.S. price, so that no consumption tax is included in the price in 
either market. The Statement of Administrative Action (p. 159) 
explicitly states that this change was intended to result in tax 
neutrality.
    While the `'Zenith footnote 4'' methodology is slightly different 
from the URAA methodology, in that section 772(d)(1)(C) of the pre-URAA 
law required that the tax be added to United States price rather than 
subtracted from home market price, it does result in tax-neutral duty 
assessments. In sum, the Department has elected to treat consumption 
taxes in a manner consistent with its longstanding policy of tax-
neutrality and with the GATT.

Analysis of Comments Received

    We received case and rebuttal briefs from Minasligas, Eletrosilex, 
and a group of five domestic producers of silicon metal (collectively, 
the petitioners). Those five domestic producers are American Alloys, 
Inc., Elken Metals, Co., Globe Metallurgical, Inc. SMI Group, and SKW 
Metals,and Alloys, Inc. We also received written comments and written 
rebuttal comments from CBCC and RIMA.
    Comment 1: Petitioners argue that the Department erred by basing 
the margin calculation for each of the four respondents on U.S. sales 
of silicon metal that did not enter U.S. Customs territory during the 
POR. Petitioners cite to section 751(a)(2) of the Tariff Act for 
support that the statute requires that margins be based on entries. 
Petitioners also cite to Torrington Co. v. United States, 818 F. Supp. 
1563, 1573 (CIT 1993) (Torrington) to demonstrate that the Court of 
International Trade (CIT) has held that the word ``entry'' as used in 
the statute refers to the ``formal entry of merchandise into the U.S. 
Customs territory.'' Furthermore, petitioners argue that the Department 
itself has stated that the use of the term ``entry'' in the antidumping 
law refers unambiguously to the release of merchandise into the customs 
territory of the United States (See Antifriction Bearings (Other than 
Tapered Roller Bearings) and Parts Thereof from the Federal Republic of 
Germany; Final Results of Antidumping Duty Administrative Review, 56 FR 
31692, 31704 (July 11, 1991) (AFBs from Germany)). Petitioners also 
state that the Department's past practice has been to conduct reviews 
of sales based on entries of subject merchandise and argue that any 
unusual circumstances that may have prompted the Department to base 
reviews on sales, rather than entries, in other case are not present 
here. Finally, petitioners argue that basing reviews on entries rather 
than sales is sound policy. By limiting reviews to entries, petitioners 
argue, the Department precludes respondents from controlling the 
outcome of administrative reviews. They Claim that basing the review on 
entries prevents manipulation because the transactions subject to 
review are determined by an objective administrative act performed by 
the U.S. Customs Service.
    CBCC and RIMA argue that the petitioners have confused the issue of 
the liquidation of entries with the issue of the scope of inquiry in an 
administrative review. They allege that, in effect, the petitioners 
have argued that a company that does not have shipments that entered 
the United States during the POR should not be reviewed. Such a policy, 
CBCC and RIMA argue, would be contrary to the express language of the 
statute and the regulations, and also a departure from the Department's 
practice in the previous administrative review of this order. 
Furthermore, they argue that the purpose of an administrative review 
is, in part, to redetermine the deposit rate based on commercial 
activities during the POR. Thus, it makes sense to base the review on 
sales because the terms of sale are established by the exporter on the 
date of sale, and not when the entry arrives in the United States.
    Eletrosilex and Minasligas argue that the petitioners made the same 
argument in the previous administrative review of this order, and the 
Department rejected it in its final results of review. They argue that 
in that review the Department cited its regulations for support that a 
review covers either ``entries or sales of the merchandise during the 
12 months immediately preceding the most recent anniversary month.'' 
Silicon Metal from Brazil; Final Results of Antidumping Duty 
Administrative Review, 59 FR 42806, 42813 (DOC Position to Comment 25) 
(August 19, 1994). They state that the Department also noted in that 
review that it had based other administrative reviews on sales rather 
than entries. Furthermore, they argue, the Department in its Advance 
Notice of Proposed Rulemaking (56 FR 63696, 63697 (December 5, 1991)) 
(Advance Notice) stated that the statutory language in toto shows that 
Congress did not intend to limit administrative reviews solely to 
entries, and that to do so would hinder the achievement of statutory 
goals governing review and assessments.
    Additionally, Minasligas argues that there are not compelling 
policy reasons that would require the Department to base administrative 
reviews solely on entries of subject merchandise because,

[[Page 46765]]

contrary to the petitioners' assertions, the respondent does not 
control the outcome of an administrative review when the Department 
bases its review on sales. First, the terms of the transaction 
involving the subject merchandise will remain the same, whether the 
Department bases the review on sales, shipments, or entries. Second, 
the entry of the subject merchandise into the customs territory of the 
United States is, in practical terms, of no importance to the 
Department's comparison of United States price (USP) to FMV to 
determine a dumping margin. Third, Minasligas argues that petitioners 
have misconstrued Torrington. Torrington, Minasligas argues, deals with 
the issue of whether entry of merchandise subject to an antidumping 
duty order into a Free Trade Zone (FTZ) ``required that antidumping 
duties be imposed on merchandise imported into a FTZ until such time as 
the merchandise enters the Customs territory of the U.S.'' (Torrington, 
818 F. Supp. at 1572, 1573 (emphasis added)). It did not, Minasligas 
argues, deal with the question at issue here, and is therefore 
irrelevant.

Department's Position

    We agree with all parties in part, and disagree with all parties in 
part.
    We agree with petitioners that normally the Department reviews 
sales where there are entries of subject merchandise during the POR. In 
determining a respondent's antidumping duty margin, the Department 
first determines whether the respondent had entries during the POR. In 
reviews where the respondent had one or more entries during the POR, 
the Department reviews the respondent's sales to determine the 
antidumping duty margin and, in accordance with section 751 (a)(2), 
uses this margin to assess on the entries during the POR. In reviews 
where the respondent had no entries during the POR, the Department 
normally conducts a no-shipment review (i.e., a review in which a 
respondent's margin from the last review/investigation in which it had 
entries is carried forward and applied in a period in which there were 
no entries). This approach is in accordance with the explicit language 
of the stastute which requires that we asses antidumping duties on 
entries during the POR.
    We do not agree with petitioners that section 751(a)(2) requires 
that we review only sales that entered U.S. customs territory during 
the POR. Section 751(a)(2) mandates that the dumping duties determined 
be assessed on entries during the POR. It does not limit administrative 
reviews to sales associated with entries during the POR. Furthermore, 
to review only sales associated with entries during the POR would 
require that we tie sales to entries. In many cases we are unable to do 
this. Moreover, the methodology the Department should use to calculate 
antidumping duty assessment rates is not explicitly addressed in the 
statute, but rather has been left to the Department's expertise based 
on the facts of each review. ``* * * the statute merely requires that 
PUDD [i.e., potentially uncollected dumping duties] * * * serve as the 
basis for both assessed duties and cash deposits of estimated duties.'' 
See The Torrington Company v. United States 44 F.3d 1572, 1578 (CAFC 
1995).
    The Department agrees with CBCC and RIMA that a company should not 
be precluded from review simply because it has no entries during the 
POR. However, the review we normally conduct under such circumstances 
is a no-shipment review (described above), and not a review of sales 
that may have occurred during the POR. No-shipment reviews ensure that 
a respondent continues to be ``reviewed'' even in situations where it 
had no entries during the POR.
    We also agree with Eletrosilex and Minasligas that the Department's 
regulations permit a review of either ``entries or sales.'' However, 
this language pertains to the methodology to employ in conducting a 
review, and does not address situations where a respondent had no 
entries during a POR.
    We also agree with Eletrosilex and Minasligas that the Department's 
Advance Notice of Proposed Rulemaking states that the statutory 
language in toto shows that Congress did not intend to limit 
administrative reviews solely to entries. However, although we may base 
a review on either sales or entries during the POR, we must rely on 
entries to determine which type of review to conduct (i.e., a sales-
based review of a no-shipment review). Contrary to Minasligas' claims, 
the entry of subject merchandise into the customs territory of the 
United States is a necessary prerequisite for a sales-based review, 
because if a respondent had no entries during a POR, we would be unable 
to assess any antidumping duties determined to be due as a result of 
our review.
    We have determined, based on information received from the U.S. 
Customs Service, that all respondents in this review had at least one 
consumption entry into U.S. customs territory during the POR. However, 
we have also determined that some respondents made sales to importers 
who had not entries during the POR. In these final results of review, 
we included all four respondents and adopted the following approach in 
determining which sales to review:
    1. Where a respondent sold subject merchandise, and the importer of 
that merchandise had at least one entry during the POR, we reviewed all 
sales to that importer during the POR.
    2. Where a respondent sold subject merchandise to an importer who 
had no entries during the POR, we did not review the sales of subject 
merchandise to that importer in this administrative review. Instead, we 
will review those sales in our administrative review of the next period 
in which there is an entry by that importer.
    After completion of this review, we will issue liquidation 
instructions to Customs which will instruct Customs to assess dumping 
duties against importer-specific entries during the period.
    Comment 2: Petitioners argue that the Department erred in its 
calculations for each of the four respondents by comparing the United 
States price (USP) to the constructed value (CV) for the month of the 
sale. They argue that in hyperinflationary economy cases it is the 
Department's practice to compare the USP to the CV for the month of 
shipment. In support of their contention, they cite Porcelain-On-Steel 
Cooking Ware from Mexico; Final Results of Antidumping Duty 
Administrative Review, 55 FR 21061, 21065 (May 22, 1990) (Porcelain-On-
Steel Cooking Ware), in which the Department stated:

where, as here, a country's economy experiences hyperinflation, we 
use a company's replacement costs incurred during the month of 
shipment, rather than its historical costs, to calculate CV and COP. 
See Amended Final Determination of Sales at Less Than Fair Value and 
Amended Antidumping Duty Order; Tubeless Steel Disc Wheels from 
Brazil, 53 FR 34566 (1988); and Oil Country Tubular Goods from 
Argentina, 50 FR 12595 (1985). This practice enables us to achieve a 
fair comparison by examining contemporaneous costs and prices, and 
thereby avoid distortions caused by hyperinflation. (emphasis 
added.)

Accordingly, petitioners argue that in the final results of review the 
Department should base its margin calculations for each of the four 
respondents by comparing USP to the CV for the months of shipment.
    Eletrosilex argues that the Department's regulations contemplate 
that, in purchase price situations, the CV will be based on ``relevant 
costs and

[[Page 46766]]

expenses at a time preceding the time the producer * * * sells the 
merchandise for exportation to the United States.'' 19 CFR 
Sec. 353.50(b)(1) (emphasis added). Furthermore, Eletrosilex argues 
that the Department has long recognized that price and cost comparisons 
are relevant only when made in a narrow and comparable time period, and 
has in the past paid special attention in hyperinflationary economy 
cases to avoid time frames that cause distortions that result from 
hyperinflation. Moreover,the determination of what is the appropriate 
time period is, Eletrosilex argues, a discretionary call that the 
Department makes based on the facts of each case. According to 
Eletrosilex, the Department's Antidumping Manual, Chapter 8, p. 61 
(August 1991 ed.) states: ``The determination of proper comparison 
periods is made on the basis of the facts in a particular 
investigation.'' The facts of this situation, Eletrosilex argues, 
warrant comparing the U.S. sale to the CV for the month of sale because 
there was a six-month interval between the date of sale and the date of 
shipment. On the date of sale (a time when prices were substantially 
depressed) the price was fixed and did not subsequently change. Six 
months later, when the merchandise was shipped, Brazil was facing 
inflation in excess of 2000 percent annually. Therefore, Eletrosilex 
claims that costs at that time had no relevance to costs or prices on 
the date of sale six months earlier.
    Minasligas argues that petitioners' argument is moot because the 
department did not compare its USP to a CV; the Department compared USP 
to a weighted-average home market sales price. However, if the 
Department uses the CV of the month of shipment in the final results, 
Minasligas argues that the Department should adjust the CV to account 
for inflation between the date of sale and the date of shipment, as was 
done in the investigation of this case. See Silicon Metal from Brazil; 
Final Determination of Sales at Less Than Fair Value, 56 FR 26977, 
26983 (June 12, 1991) (Silicon Metal Final Determination).
    Department's Position: We agree with petitioners that, when using 
CV in hyperinflationary economies, our normal practice is to compare 
the U.S. price to the CV of the month of shipment. See Porcelain-On-
Steel Cooking Ware at 21065. Therefore, we have compared USP to CV of 
the month of shipment in these final results of review, unlike in the 
preliminary results of review. However, we also agree with Minasligas 
that an adjustment should be made to CV to account for inflation 
between the date of sale and the date of shipment. Therefore, in these 
final results of review we have calculated a circumstance-of-sale 
inflation adjustment as described in Tubeless Steel Disc Wheels from 
Brazil; Amended Final Determination of Sales at Less than Fair Value 
and Amended Antidumping Duty Order, 53 FR 34566 (September 7, 1988). 
This was the same methodology followed in the original investigation of 
this proceeding. See Silicon Metal Final Determination, at 26983.
    Comment 3: Petitioners argue that the Department erred in using the 
shipment date as the date of sale for Minasligas' sales made pursuant 
to long-term contracts. They base this argument on Appendix 2-2 of the 
Department's questionnaire which says that, for sales made pursuant to 
a long-term contract, the date of sale is the date of the contract, and 
that only if the terms of sale are subject to change, and do in fact 
change up to, or even subsequent to, the date of shipment, may the date 
of shipment be taken as the date of sale. Petitioners allege that there 
is no evidence on the record to indicate that the essential terms of 
sale changed, for the sales made pursuant to a long-term contract, 
after the date of the contract. Therefore, petitioners argue the 
Department should take the date of the contract as the date of sale for 
each sale made pursuant to a long-term contract. Furthermore, as the 
dates of the contracts are not on the record of this review, 
petitioners argue that the Department should either require Minasligas 
to report the date of the contracts, or else use the best information 
available (BIA) in the final results of review.
    Minasligas argues that the Department acted properly and in full 
accord with its own precedent in using the shipment date as the date of 
sale. The Department has previously articulated, Minasligas argues, 
that the date of sale is the date on which the essential terms of the 
sale, specifically price and quantity, are finalized (See Department's 
questionnaire, Appendix 2-2, and Final Determination of Sales at Less 
Than Fair Value: Gray Portland Cement and Clinker from Japan (56 FR 
12156, 12163, March 22, 1991 (Cement from Japan). Here, Minasligas 
argues that, contrary to petitioners' assertions, evidence on the 
record indicates that the price and quantity are not finalized until 
the date of shipment.
    Department's Position: We agree with Minasligas. In Cement from 
Japan at 12163 we said:

    It is the Department's practice to determine the date of sale as 
that date on which the essential terms of the sale, specifically 
price and quantity, are finalized to the extent that they are 
outside the parties' control. See Titanium Sponge from Japan (54 FR 
13403, 13404 (April 3, 1989)) (aff'd Toho Titanium Co. v. United 
States, 743 F. Supp. 888 (CIT 1990)); Brass Sheet and Strip from 
France, 52 FR 812, 814 (1987). The Department normally considers the 
contract date as the date of sale because a written contract best 
represents the date at which the terms of sale are formalized and 
the parties are bound.

From our review of the price and quantity information on the record of 
this review, we have determined that prices for sales made pursuant to 
the same contract sometimes vary. Thus, we conclude that the parties 
are not in fact bound by the contract, and that the terms of sale are 
not finalized until the date of shipment. Hence, in these final results 
of review, as in the preliminary results of review, we have used the 
date of shipment as the date of sale.
    Comment 4: Petitioners argue that the Department lacked the 
information necessary to ``treat properly'' Minasligas' home market 
sales of silicon metal to a particular Brazilian producer of silicon 
metal. These sales were included in the margin calculation in the 
preliminary results of review. Petitioners argue that the sales volumes 
and prices to Minasligas' customer raise fundamental questions 
regarding the relationship between Minasligas and the customer. Thus, 
petitioners argue, the Department needs to know the ultimate 
disposition of the silicon metal sold to the Brazilian producer and 
whether Minasligas knew the ultimate disposition of the silicon metal 
at the time of sale, (i.e., whether the silicon metal was subsequently 
resold by the Brazilian producer to an American or third-country buyer) 
in order to determine whether the sale should have been included in 
Minasligas' home market sales listing and used in the margin 
calculation. Petitioners argue that the Department should solicit this 
information or else not use the sales in the calculation of the final 
results of review.
    Minasligas argues that the Department had all necessary information 
to treat properly all of Minasligas' home market sales. It argues that 
the petitioners have inaccurately cited Minasligas' sales volumes and 
prices to this customer, and that there is nothing on the record to 
suggest that the sales to the Brazilian producer were anything other 
than arms-length transactions. It further argues that the petitioners' 
claim that Minasligas may have known that the sales to the Brazilian 
producer may have been resold and, therefore, should have

[[Page 46767]]

been treated differently than they were, is based on vague, 
hypothetical conjecture, and is without any support in the record.
    Department's Position: We agree with Minasligas. From our review of 
the proprietary version of the record in this proceeding, we have 
determined that there is an insufficient basis for concluding that the 
sales to this particular home market customer were not arms-length 
transactions. Where prices to this customer differ from prices to other 
customers, the disparity can usually be explained as a function of 
differing quantities. Furthermore the questionnaire to which Minasligas 
responded in this review required that it report as U.S. sales, all 
sales made to unrelated intermediaries outside the U.S. that it knew at 
the time of sale were destined for delivery in the U.S. market. No 
evidence exists on the record that Minasligas failed to comply with 
this requirement. Hence, in these final results of review, as in the 
preliminary results of review, we have included the sales to this 
customer in the calculation of FMV.
    Comment 5: Petitioners argue that the Department should reject 
RIMA's cost of production (COP) response and base the margin for RIMA 
on BIA. They base this argument on numerous alleged weaknesses they 
find in the cost data that RIMA submitted. Among those alleged 
weaknesses are the following:
    (1) RIMA's financial accounting system did not record depreciation 
and inventory in accordance with Brazilian Generally Accepted 
Accounting Principles (GAAP), thus, petitioners argue, rendering the 
reported cost from the audited financial statements completely 
unreliable for antidumping purposes;
    (2) RIMA's cost accounting system (which was used to value finished 
inventory values) was not totally integrated into its financial 
accounting system;
    (3) RIMA's cost accounting system did not reconcile with supporting 
documentation (e.g., payroll and purchase ledgers).
    (4) the monthly adjustments RIMA used to reconcile the cost 
accounting system to the financial account system fluctuated immensely.
    Petitioners conclude from these points that the accounting systems 
that generated the numbers to which the reported COP/CV data were 
reconciled are completely unreliable, and that, therefore, the 
Department should reject RIMA's submitted cost data and assign RIMA a 
margin based on BIA.
    RIMA argues that none of petitioners' criticisms of its cost 
accounting system is pertinent. RIMA argues that it is permitted under 
Brazilian tax and corporate laws to not report depreciation on its 
financial statements. RIMA also claims that its failure to report 
depreciation on its financial statements is not relevant to this case 
because depreciation was calculated, verified, and taken into account 
in the cost computations. Moreover, RIMA argues that because the 
Department's methodology has departed entirely from the approach taken 
in standard Brazilian accounting, the fact that RIMA's financial 
statement may not comply with Brazilian GAAP should not be a basis for 
using BIA. Furthermore, RIMA argues that the integration of the cost 
accounting system with the financial accounting system has been 
explained in responses and shown to verifiers, who found the 
reconciliations acceptable.
    Department's Position: For the final results, we accepted RIMA's 
submitted costs as the basis for COP and CV calculations. The 
Department recognizes that concerns exist about whether RIMA's 
valuation and presentation of its production costs are in accordance 
with Brazilian GAAP (see notes 3 & 4 of the independent auditor's 
opinion on the financial statements, cost verification exhibit 4). 
However, the Department also realizes that RIMA's auditors believed 
that the cost reported in the financial statements could still be 
relied upon and stated, ``[i]n our opinion, except for that contained 
in paragraphs 3 and 4, the accounting reports * * * adequately 
represent, in all relevant respects, the net worth and financial 
position of RIMA * * *'' (see independent auditor's opinion on the 
financial statement, note 5, cost verification exhibit 4, emphasis 
added). For purposes of the Department's calculations, we note that 
RIMA did calculate and submit depreciation based on internal schedules 
maintained by the company. At verification, we reviewed these schedules 
and traced selected information to both RIMA's audited balance sheet 
and source documentation (see cost verification exibit 7). We noted no 
discrepancies. Furthermore, because the Department required RIMA to use 
monthly replacement costs, the petitioners' concern about RIMA's ending 
inventory not being recorded in accordance with Brazilian GAAP is moot. 
The Department has determined in previous cases that Brazilian GAPP 
does not reasonably reflect the costs of producing silicon metal in 
Brazil. (See Silicon Metal Final Determination at 26986.) Therefore, in 
accordance with our replacement cost methodology, the Department valued 
RIMA's actual monthly production using its respective current month's 
cost and did not use RIMA's ending inventory in calculating RIMA's COP.
    The Department also tested RIMA's cost and financial accounting 
systems. The company's cost accounting system was used to prepare 
managerial reports of product specific costs and the financial 
accounting system was used to prepare the annual financial statement. 
The two systems were linked (or integrated) through finished inventory 
values. The costs reflected in the managerial reports were adjusted 
monthly to conform with the accumulated production costs from the 
financial accounting system. RIMA officials contended at verification 
that their cost system produced questionable results and was not 
reliable. Therefore, they based cost of production on data obtained 
only from the financial accounting system. The Department found this 
approach reasonable because the figures produced by the company's cost 
accounting system were usually understated and required adjustment to 
conform with the audited financial accounting system results (See cost 
verification exhibit 9). Therefore, we were able to rely upon RIMA's 
financial statements to verify its submitted costs.
    Comment 6: Petitioners argue that the Department should increase 
RIMA's direct material input quantities by the percentages recommended 
by the Department's Office of Accounting (OA) in its preliminary 
calculation adjustment memo dated December 22, 1994. By failing to 
follow OA's recommendation that RIMA's direct material input quantities 
be increased, petitioners argue that the Department used cost figures 
and input quantities in its calculations that were unverifiable and 
specifically rejected by the verifiers. They claim that this usage of 
RIMA's data was a violation of section 776(b) of the Tariff Act which 
requires that the Department rely on BIA for unverifiable information. 
Petitioners also argue that relying on RIMA's reported cost information 
is not adverse to RIMA and, therefore, allows the company to control 
the outcome of the proceeding to its advantage.
    RIMA argues that there is no justification for applying a BIA 
figure to all of RIMA's direct material input quantities. RIMA believes 
that the Department properly rejected OA's BIA recommendation for 
direct materials. However, RIMA argues that the computer program used 
to calculate the preliminary review results shows that the Department 
increased costs. This

[[Page 46768]]

error, RIMA argues, should be corrected in the final results.
    Department's Position: We accepted RIMA's submitted direct material 
quantities as the basis for COP and CV calculations for the final 
results. We disagree with the petitioners' contention that the 
quantities were unverifiable and specifically rejected by the 
verifiers. In fact, we were able to trace the submitted quantities to 
RIMA's source documents in this review period. In the verification 
report, we stated that we traced the direct materials quantities from 
RIMA's characteristic numbers report, which is used as a basis for 
reporting its quantity of inputs, to RIMA's daily production records, 
which are maintained in the furnace control room. (See cost 
verification report, page 8, October 31, 1994). However, due to a 
discrepancy between the information provided at the first and second 
review verifications concerning the availability of furnace reports 
through November 1993, OA contemplated an adjustment to increase RIMA's 
submitted direct material quantities. Upon reflection, however, we 
decided to accept RIMA's submitted information for this review because 
each review is conducted independently of other reviews and should not, 
on such matters, be influenced by other reviews. See Fresh Cut Flowers 
from Mexico; Final Results of Antidumping Duty Administrative Review, 
60 FR 49569, 49570 (September 26, 1995).
    Furthermore, we have determined that, contrary to RIMA's assertion, 
the computer program used to calculate the preliminary results of 
review does not contain an increase to direct material input 
quantities. Therefore, for purposes of these final results of review, 
we have not adjusted the quantity of direct material inputs in the 
computer program.
    Comment 7: Petitioners argue that the Department made two mistakes 
with regard to RIMA's overhead costs. They allege that the first 
mistake was the Department's calculation of overhead by averaging 
ratios for direct labor, electricity, and direct materials calculated 
by comparing the usage for each item for silicon metal production to 
the usage for overall production. Petitioners argue that this use of a 
simple average does not accurately reflect the relationship of material 
costs, direct labor, and electricity costs to the sum of RIMA's cost of 
materials, direct labor, and utility costs. Petitioners claim that the 
Department needs to add an additional step to its calculations that 
weight-averages the adjustment ratios (based on the relationship of 
each cost item to the sum of the direct materials, electricity, and 
direct labor) to account accurately for the amount of overhead 
attributable to the production of silicon metal. Petitioners' second 
argument is that the Department erred in using the overhead costs for 
the month of sale rather than the month of shipment.
    RIMA argues that it allocated its direct labor, direct materials, 
and electricity costs to most accurately reflect its true cost of 
production. RIMA argues that it is inappropriate for the Department to 
decide whether a company's approach is the ``best allocation.'' It 
states that unless there is something seriously wrong with the overall 
cost accounting system of a company, the Department must use the 
figures developed by the company in its ordinary course of business. 
RIMA also argues that OA was incorrect to characterize the direct labor 
hours as ``estimates.'' It states that the direct labor hours are 
programmed hours, developed over time and based on actual production 
performance. Finally, RIMA argues that there is no evidence on the 
record that a more complex allocation program would be better. In fact, 
RIMA argues that electricity consumption, which the Department used in 
its revised allocation methodology, is a poor method of allocating 
indirect costs because the amount of electricity consumed varies 
greatly with the product being made and the quality of raw materials.
    Department's Position: We believe the allocation of overhead costs 
used in the preliminary results of review is appropriate, and applied 
the same methodology in these final results of review. We reviewed 
RIMA's submitted allocation method and found that it understates the 
cost of the subject merchandise. RIMA used estimated direct labor hours 
to allocate overhead costs. This method is not used in RIMA's normal 
course of business. Furthermore, the Department does not believe that 
direct labor hours alone are an adequate basis for cost allocations in 
this case because RIMA derived the hours from its cost accounting 
system which, as discussed in comment 5, does not produce accurate 
results. We believe that, based upon the specific facts of this case, 
an average of ratios based on direct labor hours, electricity usage, 
and direct material usage provides a broad and stable base for 
allocation purposes. Furthermore, this combination corresponds very 
closely to RIMA's production furnaces' machinery, and labor 
requirements. For example, silicon metal production consumes a larger 
quantity of electricity than non-subject merchandise. Therefore, a 
larger portion of the cost of maintaining the power lines and 
transformers should be allocated to the product. Finally, we note that 
RIMA's normal allocation method was examined at verification, and 
produced appropriately the same results as the method used in these 
final results (see cost verification exhibit 7).
    We also reviewed the petitioners' criticism of our calculation, and 
disagree with their suggested additional step to weight the three 
ratios based on April 1993 values. Because Brazil's economy was 
hyperinflationary during the POR, we believe that the use of a specific 
month's values in the calculation could create inappropriate results 
when applied to the remaining months of the POR. Therefore, in these 
final results of review, we have used the same computation of RIMA's 
overhead costs as we did in the preliminary results of review. However, 
we agree with petitioner that overhead costs, like the other elements 
of CV, should be based on the CV of the month of shipment. In these 
final results of review, we have based CV on the month of shipment. See 
Department's Position to comment 2.
    Comment 8: Petitioners argue that the Department erred by deducting 
RIMA's home market packing expenses from RIMA's CV before adding U.S. 
packing expenses to RIMA's CV. They argue that RIMA's CV did not 
include home market packing expenses and, therefore, these expenses did 
not need to be deducted before adding U.S. packing expenses.
    Department's Position: We agree, and have corrected this error in 
these final results of review.
    Comment 9: Petitioners cite to page two of the Department's March 
14, 1995, preliminary results analysis memorandum to argue that the 
Department erred by excluding a line item called ``HM Taxes'' from 
Eletrosilex's CV. The line item in question, petitioners believe, 
represents Eletrosilex's Program of Social Integration (PIS), Social 
Investment Fund (FINSOCIAL), and Industrialized Products (IPI), taxes. 
Petitioners argue that these taxes must be included in CV since they 
are not remitted or refunded upon exportation of the merchandise. The 
statutory authority they cite to support their argument is section 
773(e)(1)(A) of the Tariff Act, which provides that:

the constructed value of imported merchandise shall be the sum of * 
* * the cost of material (exclusive of any internal tax applicable 
in the country of exportation directly to such materials of their 
disposition, but remitted or refunded upon the exportation of the 
article in the production of which such materials are used * * * 
(emphasis added)


[[Page 46769]]


    Eletrosilix argues that petitioners' argument is flawed because 
page two of the preliminary results analysis memo to which petitioners 
cite refers not to CV, but to the calculation of Net Home Market Price.
    Department's Position: Eletrosilix is correct that page two of the 
preliminary results analysis memorandum concerns Net Home Market Price, 
and not CV. However, we believe petitioners intended to reference page 
five of the analysis memorandum, where we stated that in our 
computation of CV, we subtracted from COM the field ``HM taxes.''
    Petitioners are correct that, in accordance with section 
773(e)(1)(A) of the Tariff Act, internal taxes should be included in CV 
if they are not remitted or refunded upon exportation of the 
merchandise. After publishing the preliminary results of review, we 
solicited information from all respondents in this review regarding 
their tax payments. Eletrosilex stated that its PIS and FINSOCIAL 
(currently known as COFINS) taxes are already included in its reported 
direct materials costs (See Eletrosilex's September 6, 1995, 
submission, p. 4) Furthermore, in these final results of review, unlike 
the preliminary results of review, we have included the IPI tax (and 
also the tax on Circulation of Merchandise (ICMS)) in the calculation 
of CV for all respondents because these taxes are not remitted or 
refunded upon export of silicon metal. Because section 773(e)(1)(A) of 
the Tariff Act does not account for offsets of taxes paid due to home 
market sales, we did not account for the reimbursement to the 
respondents of ICMS and IPI taxes due to home market sales of silicon 
metal. The experience with regard to home market sales is irrelevant to 
the tax burden borne by the silicon metal exported to the U.S. 
Therefore, in these final results of review, all of the taxes 
Eletrosilex paid on its purchases of inputs for the production of 
silicon metal are included in CV.
    In adopting this methodology, we are using the methodology applied 
in the less-than-fair-value (LTFV) investigation of this case (See 
Silicon Metal Final Determination at 26984). We believe this 
methodology more strictly accords with the language of section 
773(e)(1)(A) of the Tariff Act than does the methodology used in the 
preliminary results of this review.
    Comment 10: Petitioners argue that the Department erred by 
calculating Eletrosilex's net financial expenses from information 
contained in Eletrosilex's financial statements. Petitioners argue that 
the financial statements are unreliable for calculating Eletrosilex's 
net financial expenses for antidumping purposes because they include 
both long and short-term interest income, whereas the Department's 
practice is to offset interest expenses by only short-term interest 
income. Furthermore, petitioners note that in response to further 
questioning by the Department, Eletrosilex reported monthly total 
interest income rather than only short-term interest income. 
Petitioners argue that the Department should, therefore, make no offset 
to Eletrosilex's short-term interest expense.
    Eletrosilex argues that it had no long-term interest income during 
the POR, and that all of its interest income was from short-term 
investments. Therefore, Eletrosilex argues, the Department properly 
subtracted all of its reported interest income from interest expenses 
in determining its net interest expenses.
    Department's Position: We agree with the respondent. During 
verification, we traced financial receipts to source documentation to 
confirm that Eletrosilex's audited interest income figure was derived 
from only short-term investments (cost verification exhibit 12). We 
noted no discrepancies. Therefore, in these final results of review, as 
in the preliminary results of review, we allowed Eletrosilex to offset 
financing costs by the reported interest income.
    Comment 11: Petitioners argue that the Department incorrectly 
calculated Eletrosilex's cost of overhauling one of its furnaces. 
Petitioners argue that the Department's calculation, which allocated 
costs equally to all months of the POR and applied each month's 
inflation rate to those costs, fails to account for the compounding 
effect of inflation. However, petitioners claim that the Department 
properly rejected Eletrosilex's September 1992 projected costs. 
Petitioners argue that using projected figures would violate the 
Department's practice of calculating replacement costs based on actual 
figures.
    Eletrosilex argues that the use of compounded inflation rates by 
the Department is discretionary. Furthermore, it argues that the merits 
of using compounded inflation rates should be weighed against 
Eletrosilex's argument that the maintenance costs should be allocated 
over a longer period of time, not less than three years, because the 
furnace breakdown was a highly aberrational event. Eletrosilex also 
contends that the Department erred in using the actual production 
volume in the COP/CV calculations for the month of September 1992, and 
argues that the Department should instead use Eletrosilex's projected 
output.
    Department's Position: We agree with petitioners. First, the 
petitioners are correct in arguing that COP/CV data should be based 
upon actual results and not projections. See Final Determination of 
Sales at less Than Fair Value: Oil Country Tubular Goods from Austria, 
60 FR 33551, 33557 (June 28, 1995). Therefore, in these final results 
of review, as in the preliminary results of review, the Department used 
actual production tons and not projected results to obtain 
Eletrosilex's actual per-ton costs for September 1992. Second, we 
amortized Eletrosilex's shut down costs over the POR since the repairs 
benefited production during this period. We are rejecting Eletrosilex's 
three year amortization period because the longer time period is 
unsupported by facts on the record. Additionally, we discussed the POR 
amortization period with company officials at verification. At that 
time, company officials agreed with the suggested period and did not 
offer any alternate amortization periods (see October 5, 1994, cost 
verification report, p. 5). Third, we have adjusted our calculation to 
account for the compounding effects of inflation.
    Comment 12: Petitioners argue that the Department double-counted 
Eletrosilex's claimed duty drawback for ICMS and IPI taxes paid on 
imported electrodes by adding the duty drawback adjustment to USP, but 
also excluding ICMS and IPI taxes from CV. They argue that the 
Department's practice has been to perform its calculation in such a way 
that double-counting does not occur. In support of their view, 
petitioners cite Final Determination of Sales at Less Than Fair Value: 
Mechanical Transfer Presses from Japan, 55 FR 335, 343 (January 4, 
1990), in which the Department said that if duty drawback is ``not 
included in the materials costs in the calculation of COM (cost of 
manufacture), the Department [adds] these uncollected duties to the 
CV.''
    Eletrosilex argues that it does not include ICMS and IPI taxes in 
its COM because they are not costs to Eletrosilex. Rather, because they 
are value-added taxes, their cost is passed along to the next user. 
Therefore, Eletrosilex argues, the Department should not consider these 
taxes in its calculation of CV. Furthermore, Eletrosilex argues, it is 
the Department's practice, in accordance with section 773(e)(1)(a) of 
the Tariff Act, not to include in CV any internal tax which is remitted 
or refunded upon exportation of the product in which the material is 
used. Eletrosilex states that because more than 87 percent of their 
product is exported, nearly all of the tax

[[Page 46770]]

would be excluded from the CV calculation under any circumstances.
    Department's Position: We agree with petitioners. Eletrosilex's 
argument with respect to section 773(e)(1)(a) of the Tariff Act is not 
valid because the duty drawback law applicable to Eletrosilex suspends 
the payment of ICMS and IPI taxes that would ordinarily be due upon 
importation of electrodes. Therefore, because the ICMS and IPI taxes 
are suspended, we cannot conclude that they are already included in the 
COM or the tax payments that Eletrosilex has reported. Thus, in order 
to make an ``apples-to-apples'' comparison between USP And CV, we need 
to add to CV the full amount of the duty drawback that we added to USP 
in accordance with section 772(d)(1)(B) of the Tariff Act. We have done 
so in these final results of review.
    Comment 13: Petitioners argue that the Department used an incorrect 
exchange rate in converting five of Eletrosilex's U.S. selling and 
movement charges from cruzeiros to U.S. dollars. They argue that the 
Department should use a devalued exchange rate because Eletrosilex 
reported its charges in devalued cruzeiros.
    Eletrosilex argues that the petitioners's argument is confused 
because the Department used the exchange rate which petitioners, in 
their case brief, argued should be used, i.e., the exchange rate of the 
month of shipment.
    Department's Position: We agree with Eletrosilex. Our standard 
methodology in reviews involving hyperinflationary economies is to 
convert U.S. movement expenses using the exchange rate in effect on the 
date the costs were incurred. We employ this methodology to avoid 
creating dumping margins that result only from the rapid depreciation 
of a local currency during the interval between the month of sale and 
the month of shipment. See Steel Wheels from Brazil, Final 
Determination of Sales at Less than Fair Value, 54 FR 21456, 21459 (May 
18, 1989) (Steel Wheels). Thus, in these final results of review, as in 
the preliminary results of review, we have converted Eletrosilex's U.S. 
export costs into U.S. dollars using the monthly exchange rate in 
effect during the month of shipment.
    Comment 14: Petitioners argue that the Department erred by 
comparing Eletrosilex's U.S. prices inclusive of ICMS tax to a CV 
exclusive of ICMS tax. By doing so, the Department failed to make an 
``applies-to-apples'' comparison. Moreover, they argue that section 
772(d)(2) of the Tariff Act states that the USP shall be reduced by 
``any additional costs and charges * * * incident to bringing the 
merchandise * * * the United States'' and by ``any export tax * * * or 
other charge imposed by the country of exportation on the exportation 
of the merchandise to the United States * * *'' if included in the 
price of the merchandise. Therefore, petitioners argue that the 
Department should subtract from Eletrosilex's USP the ICMS taxes that 
were included in the reported gross prices.
    Eletrosilex argues that the ICMS tax is applied to the sale of 
semi-industrialized products, such as silicon metal, and the law 
specifically excludes any waiver of the tax upon exportation. 
Therefore, Eletrosilex argues, the ICMS tax is not an export tax and 
is, therefore, properly included in the calculation of USP.
    Department's Position: We disagree with petitioners that the ICMS 
tax is an export tax or other charge imposed on the exportation of the 
merchandise to the United States as defined in section 772(d)(2) of the 
Act. The ICMS tax is imposed upon all sales of this product, regardless 
of the market to which it is destined. Since the tax is not levied 
solely upon exported merchandise, it does not constitute an export tax 
and cannot be subtracted from the USP of the merchandise under section 
772(d)(2). However, the Department has concluded that the ICMS tax must 
be added to the constructed value (CV) of the product. Section 
773(e)(1)(A) of the Act requires the deduction from CV of any internal 
tax applicable directly to material inputs or their disposition which 
has been rebated or not collected upon exportation. For Eletrosilex, 
this tax was collected upon exportation, but not rebated. Thus, the tax 
must be added to the CV to properly reflect the true costs and expenses 
borne by the product.
    Comment 15: Petitioners argue that the Department used an incorrect 
exchange rate in converting three of CBCC's U.S. movement charges from 
cruzeiros to U.S. dollars. They argue that the Department should use a 
devalued exchange rate because CBCC reported its charges in devalued 
cruzeiros.
    CBCC argues that the petitioners' only argument for using an 
artificially-determined rate rather than the true and real rate in 
effect on the date the expense was incurred is that it results in a 
very small increase in the expense in dollars. The Department was 
correct, CBCC argues, to seek a calculation of values based on the 
prevailing and correct economic indices in effect at the time of the 
transaction.
    Department's Position: Our standard methodology in reviews 
involving hyperinflationary economies is to convert U.S. movement 
expenses using the exchange rate in effect on the date the costs were 
incurred. We employ this methodology to avoid creating dumping margins 
that result only from the rapid depreciation of a local currency during 
the interval between the month of sale and the month of shipment. (See 
Department's Position to comment 13.) Thus, in these final results of 
review we have converted CBCC's U.S. export costs into U.S. dollars 
using the monthly exchange rate in effect during the month of shipment. 
We intended to employ this methodology for all U.S. movement expenses 
in the preliminary results. However, in our review of the computer 
programs used for the preliminary results, we determined that for 
warehousing we used the exchange rate during the month of sale. We have 
corrected this error in these final results of review.
    Comment 16: Petitioners argue that the Department erred by 
deducting CBCC's home market packing expenses from CBCC's CV before 
adding U.S. packing expenses to CBCC's CV. They argue that CBCC's CV 
did not include home market packing expenses and, therefore, they did 
not need to be deducted before adding U.S. packing expenses.
    Department's Position: We agree, and have corrected this error in 
these final results of review.
    Comment 17: Petitioners argue that the Department erred by using 
the incorrect indirect selling expenses in its calculation of CBCC's 
CV. The Department's preliminary results analysis memorandum for CBCC 
states that the Department used the indirect selling expenses CBCC 
submitted in its March 22, 1994, submission. Petitioners allege that, 
in reality, the Department used the indirect selling expenses submitted 
by CBCC in its March 17, 1994, submission.
    Department's Position: We disagree. Upon review of the computer 
program used to calculate the preliminary results of review, we have 
determined that we used the indirect selling expenses that CBCC 
reported in exhibit 9 of its March 22, 1994, submission.
    Comment 18: Minasligas argues that the Department erred in its 
method of calculating an ICMS tax rate to be applied to its USP. 
According to Minasligas, the Department's method was to calculate an 
average rate based on home market sales prices for the entire POR, and 
to then deduct from that rate the ICMS tax payable on exports. 
Minasligas contends that this method is flawed in two ways. First, it 
is distortive in a hyperinflationary

[[Page 46771]]

economy such as Brazil's because it biases the result in favor of sales 
that occur later in the POR. A more accurate method, Minasligas argues, 
is to perform the calculation on a monthly basis. Second, Minasligas 
argues that the method is flawed because Minasligas is exempt from 
paying ICMS tax on its exports which is evident in the information on 
the record of this review. Thus, the Department should not have made a 
deduction from the calculated ICMS tax rate for any ICMS tax allegedly 
due on exports.
    Petitioners comment that the Department used the wrong set of home 
market sales in calculating Minasligas' FMV (see comments 3 and 4 
above). Thus, any recalculation of the ICMS tax rate that the 
Department performs should be based on the correct set of sales.
    Department's Position: In these final results of review, we have 
not calculated a tax rate to be applied to USP. Rather, as discussed 
under the ``Consumption Tax'' section of this notice, where we have 
made price-to-price comparisons, we have added to U.S. price the 
absolute amount of tax charged in the home market. Moreover, because 
Brazil had a hyperinflationary economy during the period of review, we 
have calculated the absolute amount of tax on a monthly basis, rather 
than an annual basis, in order to avoid distortion resulting from 
hyperinflation. Finally, we agree with Minasligas that evidence on the 
record indicates that Minasligas' export customers were not charged 
ICMS tax. In the preliminary results we made a deduction from the home 
market tax rate that we applied to the U.S. price because we mistakenly 
believed that Minasligas paid ICMS tax on its exports. In these final 
results of review, we have added to Minasligas's U.S. selling price the 
absolute amount of tax without making any deductions.
    We disagree with petitioners' argument that we based FMV on the 
wrong set of sales. See the Department's Position to comments 3 and 4.
    Comment 19: Minasligas argues that the Department erred in 
including inventory carrying costs in its computation of CV. It argues 
that it is the Department's longstanding practice to exclude inventory 
carrying costs from the computation of CV when all of the U.S. sales 
were purchase price transactions, as is the case here. (See Notice of 
Amended Final Determination of Sales at Less Than Fair Value: 
Ferrosilicon from Brazil; 59 FR 8598, 8599 (February 23, 1994).) Thus, 
Minasligas argues that if the Department resorts to CV in the final 
results of review, inventory carrying costs should be removed from the 
computation of CV.
    Department's Position: This issue is moot with respect to 
Minasligas because we did not use CV as the basis of FMV for Minasligas 
in these final results.
    Comment 20: Minasligas argues that the Department erred in its 
computation of CV by not removing its inland freight costs from the 
direct selling expenses before calculating profit. The effect of this 
error, Minasligas argues, is to increase profit by 8 percent of the 
amount of inland freight.
    Department's Position: This issue is moot with respect to 
Minasligas because we did not use CV as the basis of FMV for Minasligas 
in these final results.
    Comment 21: RIMA argues that the Department erred in calculating an 
arm's-length price for the cost of RIMA's self-produced charcoal by 
using the April 1993 cost as the basis for calculating a write-up for 
the entire POR. It argues that there is no reasons to take an 
arbitrarily chosen month and apply it across a year's worth of data 
where, as here, data exist for each month of the POR, and the 
calculation is relatively simple.
    Petitioners argue that RIMA is incorrect in stating that sufficient 
information is on the record to enable the Department to calculate an 
adjusted charcoal cost for each month of the POR. Specifically, RIMA 
did not submit information on the quantity of charcoal purchased each 
month from related and unrelated suppliers. Therefore, petitioners 
argue that in the final results of review the Department should base 
its adjustment for charcoal cost on the information submitted by RIMA 
for April 1993, as it did in the preliminary results of review. The 
petitioners also contend that the Department should increase the cost 
of quartz to account for wastage.
    Department's Position: We agree with petitioners that our charcoal 
adjustment used in the preliminary results of review is appropriate. 
RIMA obtained charcoal from unrelated suppliers, related suppliers, and 
company-owned plantations. At verification, RIMA did not provide 
information to support its claim for costs incurred for self-produced 
charcoal and for costs incurred for charcoal acquired from related 
suppliers. Instead, RIMA suggested that the Department value all 
charcoal consumed during the POR using the replacement cost of monthly 
purchases from related suppliers. Therefore, as representational 
figures in this case, we used the relative quantity and value of 
charcoal purchased from related and unrelated suppliers during the 
month of April 1993 as BIA to increase charcoal costs (see cost 
verification exhibit 15). Furthermore, we reviewed the information on 
the record and not that RIMA reported monthly per-unit prices of 
charcoal in its submitted inventory holding gain and loss calculation, 
but did not submit information on the quantity of charcoal purchased 
from related and unrelated suppliers (see most verification exhibit 
13). Therefore, contrary to RIMA's statement, the Department could not 
calculate monthly charcoal adjustments for any month other than April 
1993.
    As for the petitioners' concern about waste, in these final results 
of review we have increased RIMA's quartz quantity based on the waste 
factor provided by RIMA officials at verification. (See cost 
verification report, p. 3.)
    Comment 22: RIMA states that there is a discrepancy between the 
cost spreadsheet from the preliminary results analysis memorandum and 
the computer printout that calculated the margins. It claims that the 
COM in the computer printout is approximately ten percent higher than 
the spreadsheet. RIMA argues that this error should be corrected in the 
final results.
    Department's Position: In its case brief, RIMA cited to no specific 
numbers in the computer program that vary from the COP spreadsheet. 
Nevertheless, we have extensively reviewed the computer program used to 
calculate the margins for the preliminary results for any possible 
errors with regard to COM, and we have found none. We believe that 
RIMA's confusion may be due to the fact that the variable COM on the 
computer output pages labeled ``Constructed Value Profit'' of the 
margin calculation program is the COM of the month of payment, rather 
than the COM of the month of sale.
    Comment 23: RIMA argues that the Department erred by not making an 
adjustment for inventory holding gains and losses. It states that this 
adjustment is necessary in order to account for short-term inventory 
gains that accrue when using a replacement cost accounting system, as 
was done in this administrative review. Furthermore, RIMA argues that 
it is not clear from the decision memorandum what the perceived defect 
is in the inventory holding figures that RIMA reported. RIMA speculates 
that the apparent problem is that the Department has changed 
methodologies between the original investigation and this review. RIMA 
claims that the Department cannot ask for data, verify the data, and 
then use a methodology that does not use the data.
    Petitioners argue that the Department correctly rejected RIMA's 
inventory

[[Page 46772]]

holding gain and loss calculation because RIMA had failed to follow the 
Department's methodology for calculating inventory holding gains and 
losses in a hyperinflationary economy. Petitioners cite the 
Department's preliminary results analysis memorandum (p. 7) to document 
that the Department determined that RIMA had failed to properly layer 
the inventory and to value it at the production cost for each month. 
Thus, petitioners argue, the Department's basis for rejecting RIMA's 
calculation was not because the Department had changed methodologies. 
Petitioners further argue that because RIMA submitted inaccurate 
information, the Department is required not only to reject RIMA's 
inventory carrying gains/losses calculation, but to resort to BIA for 
RIMA's inventory holding gains and losses.
    Department's Position: We reviewed RIMA's inventory gains and 
losses calculation and found certain inconsistencies which render that 
calculation unacceptable. In its calculation, RIMA failed to follow our 
instructions to layer inventory by month, and identify when the 
finished goods and direct materials were produced or purchased (See 
question C.5 of the questionnaire and cost verification exhibit 13). 
RIMA cannot shift the burden of correcting the calculation to the 
Department when, as here, doing so would require substantial inventory 
identification and the performance of numerous recalculation. (See, 
e.g., Chinsung Indus, Co., Ltd. v. United States, 705 F. Supp. 598 
(February 7, 1989.) Thus, we have denied RIMA an adjustment for 
inventory carrying gains/losses. Furthermore, we do not agree with 
petitioners that we must use BIA. There is no legal or policy precedent 
which requires the Department to resort to BIA when we deny an 
adjustment that a respondent failed to accurately and adequately 
substantiate.
    Comment 24: RIMA argues that the Department double-counted its 
credit expenses in the cost test by imputing them to COP and also 
deducting credit from the home market price compared to COP.
    Petitoners argue that, contrary to RIMA's assertion, the Department 
did not reduce home market price by a credit adjustment prior to 
performing the cost test. The analysis memorandum and the computer 
program used to calculate the preliminary results of review both 
indicate, petitioners' argue, that the only adjustment the Department 
made to the home market price before comparing the price to the COP of 
the month of payment is that for the ICMS tax.
    Department's Position: We agree with petitioners. In the 
preliminary results of review we made no deduction of credit from the 
home market selling price before comparing the price to COP. Thus, we 
did not double-count RIMA's credit expenses.
    Comment 25: CBCC argues that the Department erred in performing the 
cost test when it applied a deflator to CBCC's home market selling 
prices before comparing them to the COP. It argues that because nothing 
on the record defines the deflator or explains its use, it should be 
removed from the computer program because its use was not in accordance 
with law.
    Department's Position: We agree in part. In the preliminary results 
of review we compared CBCC's home market selling prices, net of 
adjustments, to the COP for the month of payment. This information was 
contained on page 4 of the preliminary results analysis memorandum for 
CBCC. Inadvertently omitted from the analysis memorandum (but included 
in the analysis memoranda for other respondents in this review) was the 
explanation that for sales with payment dates after the POR, we 
performed the cost test by comparing the COP of the last month of the 
review period to a deflated sales price. We have followed this 
methodology in these final results of review as we did in the 
preliminary results of review. The specifics of how we calculated the 
deflator are contained in the final results analysis memorandum for 
CBCC. However, in the computer program used to calculate the 
preliminary results of review, we mistakenly applied the deflator to 
all home market sales, and not just those with payment dates after the 
POR. We have corrected this error in these final results of review.
    Comment 26: CBCC argues that the Department erred in calculating 
the direct selling expenses used in computing its COP/CV. These selling 
expenses consist of three elements: shipping, warehousing, and 
commission. CBCC states that the Department's computation of shipping 
expenses incorrectly included shipping expenses for all products that 
CBCC produces, and not just silicon metal. CBCC argues that in the 
final results, the Department should allocate shipping expenses to 
silicon metal based on the volume of silicon metal shipped as a 
percentage of shipments of all products. With respect to warehousing, 
CBCC argues that it incurs no warehousing expenses on its domestic 
sales; therefore, warehousing should not be considered a home market 
direct selling expense. Furthermore, in the computation of CV, 
warehousing expenses (which are all incurred on exports) are already 
included in the computation of the foreign unit price in dollars. Thus, 
by also including them in the calculation of CV, warehousing expenses 
are double-counted. With respect to commissions, CBCC argues that it 
incurs no commission in the home market on sales of silicon metal, and 
that, therefore, commissions also should not be included as direct 
selling expenses.
    Petitioners argue that the Department should not consider the 
arguments CBCC has set forth in support of its position because they 
are untimely and unsupported. The antidumping questionnaire to which 
CBCC responded, petitioners state, requests CBCC to report selling 
expenses ``associated with the same general class or kind of 
merchandise sold in the home market/third country.'' The arguments in 
CBCC's case brief, which CBCC failed to supply in its questionnaire 
response are, according to petitioners, based on untimely information 
which the Department is obliged under its regulations not to consider. 
Moreover, petitioners argue that CBCC's proposed methodology for 
reducing shipping costs is flawed because it is based on quantities 
produced, and not on quantities sold.
    Department's Position: We have reviewed the record of this 
proceeding and determined that the information CBCC submitted in its 
case brief is not new information. Contrary to petitioners' assertions, 
CBCC did provide this information in its November 1, 1993, 
questionnaire response (pp. 8, 9, 23, and exhibit 11). We agree with 
CBCC that because it incurs no warehousing expenses on sales of silicon 
metal in the home market and pays no commissions in the home market, 
these expenses should not be included in its COP/CV for silicon metal. 
Because we have removed warehousing expenses from COP/CV, they are not 
double-counted in these final results of review. Furthermore, the 
Department does not treat shipping expenses as direct selling expenses. 
See Color Televisions Receivers from the Republic of Korea; Final 
Results of Antidumping Duty Administrative Review, 55 FR 26225, 26230 
(June 27, 1990), where we stated that inland freight was a movement 
expense, and not part of selling, general, and administrative expense. 
Therefore, because CBCC incurred no direct selling expenses on its home 
market sales of silicon metal, we have removed the

[[Page 46773]]

selling expense category from the calculation of COP/CV.
    Comment 27: CBCC argues that the Department incorrectly calculated 
CBCC's general and administrative (G&A) expenses. It states that, in 
the preliminary results, the Department divided the financial statement 
G&A by the financial statement cost of goods sold (both of which were 
calculated on a historical cost basis), and multiplied the resulting 
percentage by the replacement cost COM for each month. CBCC states that 
this methodology was explicitly found deficient by the CIT on an appeal 
of the initial investigation in this case. There, CBCC states, the CIT 
remanded the case to the Department and directed it to use a consistent 
criterion. As a result, the percentage or ratio of G&A expenses to 
historical cost in the financial statement had to be applied to the 
historical cost of silicon metal in each respective month of the POR. 
CBCC argues that the Department should do the same in this review.
    Petitioners argue that the CIT decision relied upon by CBCC has 
been vacated by the U.S. Court of Appeals for the Federal Circuit 
(CAFC). (See Camargo Correa Metais, S.A. v. United States, 52 F.3d 1040 
(Fed. Cir. April 17, 1995).) As a result, petitioners argue, CBCC's 
argument should be rejected, and the Department should calculate 
monthly G&A and financial expenses for all respondents based on 
replacement COM in accordance with its long-established practice prior 
to the CIT decision relied upon by CBCC.
    Department's Position: We agree, in part, with both the respondent 
and the petitioners. First, the petitioner is current that the CIT 
decision has been vacated by the CAFC. Therefore, we could calculate 
monthly C&A and financial expenses for all respondents based on 
replacement COM in accordance with our establishment practice prior to 
the CIT decision. However, CBCC correctly points out that this 
methodology does not use a consistent criterion. Therefore, we 
recalculated CBCC's G&A factor on a replacement cost basis. We 
readjusted CBCC's G&A factor on a company-wide annual basis by indexing 
CBCC's submitted monthly nominal G&A and cost of sales figures. The 
purpose of indexing the respondent's monthly figures is to obtain 
values at a uniform price level because the simple addition of monthly 
nominal values during a period of high inflation would yield a 
meaningless result. We then divided the indexed G&A figure by the 
indexed cost of sales figure to derive the company's annual G&A factor 
on a replacement cost basis. We then multiplied this factor by the 
monthly replacement COM. For these final results, the Department used 
this method to calculate G&A factors for all respondents except 
Eletrosilex because it submitted a constant purchasing power, audited 
financial statement.
    Comment 28: CBCC argues that the Department double-counted its 
credit expenses by imputing them to COP and also deducting credit from 
the home market price compared to COP.
    Petitioners argue that, contrary to CBCC's assertion, the 
Department did not reduce home market price by a credit adjustment 
prior to performing the cost test. The analysis memorandum and the 
computer program used to calculate the preliminary results of review 
both indicate, petitioners argue, that the only adjustment the 
Department made to the home market price before comparing the price to 
the COP for the month of payment is that for the ICMS tax.
    Department's Position: We agree with petitioners. In the 
preliminary results of review we made no deduction of credit from the 
home market selling price before comparing the price to COP. Thus, we 
did not double-count CBCC's credit expenses.
    Comment 29: CBCC argues that the Department incorrectly calculated 
CBCC's financial expenses by using an interest factor based on 
historical cost multiplied by the monthly replacement COM. CBCC 
contends that this method is contrary to the CIT decision in the 
initial investigation of this case. CBCC also argues that the 
Department should not consolidate CBCC's financial expenses with those 
of its parent company, Solvay do Brasil (Slovay), because CBCC incurred 
no financial expense during 1992 and 1993. Furthermore, CBCC states 
that Slovay's financial expenses do not relate to the production of 
silicon metal.
    The petitioners contend that the Department's interest calculation 
is permissible since the CIT ruling was subsequently vacated by the 
CAFC. Furthermore, the petitioners argue that the Department correctly 
consolidated the financial expense. To support its argument the 
petitioners cite the Final Determination of Sales at Less Than Fair 
Value: New Minivans from Japan, 57 FR 21937, 21946 (May 26, 1992), in 
which the Department said its practice ``is based on the fact that the 
group's parent, primary operating company, or other controlling entity, 
because of its influential ownership interest, has the power to 
determine the capital structure of each member within the group.'' The 
petitioners also cite Final Determination of Sales at Less Than Fair 
Value: Certain Carbon Steel Butt-Weld Pipe Fittings from Thailand, 57 
FR 21065, 21069 (May 18, 1992), in which the Department said that it 
``is the Department's policy to combine the financing activities of a 
parent or subsidiary when the parent exercises control over the 
subsidiary (i.e., meets the requirements for consolidation).'' 
Therefore, the petitioners argue that consolidating the financial 
statements of CBCC and Solvay is justified because Solvay has a 
controlling interest in CBCC, and thus has the power to decide the 
composition of CBCC's capital structure. Finally, the petitioners 
believe that the Department's interest calculation incorrectly 
subtracted CBCC's total financial revenue from its total financial 
expenses. The petitioners argue that the correct method is to subtract 
only the short-term interest income from CBCC's financing costs.
    Department's Position: We disagree with CBCC's claim that its 
interest factor should be based on only historical figures. The 
Department's preferred methodology is to calculate CBCC's interest 
factor on a replacement cost basis (see Department's Position to 
comment 27 for details on this methodology). However, in this case we 
do not have the necessary information on the record to index monthly 
interest costs. Therefore, we calculated financial expenses based on 
our established practice prior to the CIT decision because it is still 
a viable method (see comment 27 for details). See Silicon Metal from 
Brazil; Final Results of Antidumping Duty Administrative Review, 59 FR 
42806 (August 19, 1994).
    Regarding CBCC's argument that we should not have consolidated the 
interest expenses of CBCC with Solvay, we agree with the petitioners 
that CBCC should report interest expenses on a consolidated basis 
regardless of what they produce. We maintain that the cost of capital 
is fungible, and we allocate a proportional share of interest expenses 
to all goods produced by a respondent during the POR. The Department 
considers financing expenses to be costs incurred for the general 
operations of the corporation. We recognize the fungible nature of a 
corporation's invested capital resources, including debt and equity, 
and we do not allocate corporate financing expenses to individual 
divisions of a corporation on the basis of sales per division. Instead, 
we allocate the interest expense related to the debt portion of the 
capitalization of the corporation, as we appropriate, to the total 
operations of the consolidated corporation. This consolidation 
methodology is consistent with our longstanding practice for computing

[[Page 46774]]

interest expense in cases involving parent-subsidiary corporate 
relationships. See, e.g., Final Determination of Sales at Less Than 
Fair Value, Small Business Telephones from Korea, 54 FR 53141, 53149 
(December 27, 1989). Therefore, for these final results we calculated 
net financing costs on a consolidated basis.
    Regarding CBCC's claim that it is inappropriate to use consolidated 
interest figures because CBCC has no debt, we note that this argument 
fails to take into consideration any borrowing costs associated with 
Solvay's initial and subsequent capital investment in the company. CBCC 
maintains that all interest expenses incurred by Solvay pertain solely 
to the parent's operations. Under this principle, CBCC would have us 
accept that its parent funds its own operations from borrowing while, 
at the same time, funding its investment in CBCC solely through equity 
capital. Such a principle ignores the fact that Solvay's capital 
structure is comprised of both debt and equity. Therefore, it is 
neither possible, nor appropriate, in our analysis to allow the company 
to pick and chose which portions of its parent's operation should incur 
the additional interest costs associated with borrowed funds.
    Regarding petitioners' claim that financing costs should not be 
reduced by interest income, we note that during verification we 
confirmed that Solvay's audited interest income figure was derived from 
only short-term investments. (See cost verification exhibit 19.) We 
noted no discrepancies. Therefore, we allowed Solvay to offset 
financing costs by the reported interest income.
    Comment 30: CBCC alleges that the Department applied an incorrect 
criterion for profit in the CV calculation. It states that, although it 
is impossible to determine from the disclosure documents the source of 
the profit calculations, the profit margins indicated in the output of 
the computer program suggest that there was a programming error.
    Department's Position: The profit calculation was skewed in the 
preliminary results of review because we calculated a profit ratio 
using cost and revenue data computed over the entire POR. Because 
Brazil was a hyperinflationary economy during the POR, we have, in 
these final results of review, calculated a profit ratio for each month 
of the review period using cost and revenue data calculated on a 
monthly basis. We then weight-averaged these profit ratios to calculate 
an annual profit ratio. For any respondent whose profit ratio was 
greater than eight percent, we used the actual profit ratio in the 
computation of profit for CV. For any respondent whose profit ratio was 
less than eight percent, we used the statutory minimum of eight 
percent.
    Comment 31: CBCC argues that the Department incorrectly calculated 
the FMV for March 1993. It states that the CV for March 1993, according 
to the expanded sales listing of the program output, is one figure, 
whereas the FMV used in the margin calculation for the same month is a 
different figure. CBCC argues that the disclosure documents do not 
explain the reason for the differences in the two figures, and 
therefore, CBCC concludes that there was an error either in the program 
or in the criteria employed.
    Department's Position: We have reviewed extensively the computer 
program and output, including the expanded sales listing for March 
1993, and have been unable to determined why CBCC believes the CV for 
March 1993 is the figure that it cites in its case brief. This figure 
appears nowhere in the output. Therefore, we found no error in the 
computer program based on this comment from CBCC.
    Comment 32: Eletrosilex argues that the Department erred in 
calculating its imputed credit expense by using the short-term interest 
rates charged by the state bank of Minas Gerais. It states that it 
reported its own actual short-term borrowing rates, and that these 
rates should have been used in the imputed credit calculation. Use of 
the exogenous rates, Eletrosilex argues, inflated the determination of 
CV and distorted the CV in a manner prejudicial to Eletrosilex.
    Petitioners argue that it is the Department's policy to calculate 
home market imputed credit expenses based on an interest rate tied to 
the currency in which the home market sales were made. (See Final 
Determination of Sales at Less Than Fair Value: Circular Welded Non-
Alloy Steel Pipe from Mexico, 57 FR 42953, 42956 (September 17, 1992) 
and Final Determination of Sales at Less Than Fair Value: Certain Hot-
Rolled Carbon Steel Flat Products, Certain Cold-Rolle Carbon Steel Flat 
Products and Certain Cut-to-Length Carbon Steel Plate from Belgium, 58 
FR 37083, 37089 (July 9, 1993).) Because Eletrosilex's home market 
prices were invoiced in Brazilian currency and the interest rates that 
Eletrosilex reported were for loans denominated in U.S. dollars, 
petitioners argue that the Department was correct in not using 
Eletrosilex's reported rates for home market imputed credit. For the 
final results, petitioners claim that the Department should continue to 
use a home market interest rate denominated in Brazilian currency to 
calculate home market credit expenses. Moreover, petitioners argue that 
in the preliminary results the Department erroneously divided a monthly 
interest rate by 365 instead of 30 days, and that this error should be 
corrected in the final results.
    Department's Position: We agree with petitioners that because the 
loans Eletrosilex reported were loans denominated in U.S. dollars, we 
cannot use the interest rates on those loans for calculations involving 
Brazilian currency. See Notice of Final Determination of Sales at less 
Than Fair Value and Negative Critical Circumstances Determination: 
Disposable Pocket Lighters from Thailand, 60 FR 14263, 14269 (March 16, 
1995); Final Determination of Sales at Less Than Fair Value; Fresh Cut 
Roses from Colombia, 60 FR 6980, 6998 (February 6, 1995). Therefore, 
for the computation of home market credit, we have used the short-term 
interest rates charged by the state bank of Minas Gerais, as we did for 
the preliminary results. In these final results of review, we have, 
however, applied Eletrosilex's U.S. dollar-denominated interest rates 
to its calculation of U.S. imputed credit. We also agree with the 
petitioners that because the interest rates used in the calculation are 
monthly rates, the denominator should be 30, rather than 365. We have 
corrected this error in these final results of review.
    Comment 33: Eletrosilex argues that the Department erred in not 
granting an inventory carrying cost offset to its CV financing costs. 
Eletrosilex argues that in making a CV calculation the Department uses 
annualized calculations for G&A and interest expense. Therefore, there 
is no sound reason for the Department to ignore an accurate calculation 
designed to make the CV calculation conform as closely as possible to 
reality.
    Department's Position: We disagree with Eletrosilex. For the final 
results, we disallowed Eletrosilex's submitted CV inventory carrying 
cost offset because the company's POR sales were purchase price 
transactions, and not exporter's sales price transactions (see 
Eletrosilex's November 1, 1993, submission, p. 17). Thus, the inventory 
carrying cost offset is not a factor.
    Comment 34: Petitioners argue that because Eletrosilex failed to 
properly layer its inventory, the Department was correct in rejecting 
Eletrosilex's reported inventory holding gains/losses calculation. 
Petitioners argue that in its calculation, Eletrosilex also failed to 
report beginning inventory for one of the months for charcoal, wood, 
quartz,

[[Page 46775]]

and electrodes. Furthermore, according to petitioners, Eletrosilex also 
calculated inventory holding gains/losses for only direct materials, 
and not for secondary materials or for finished goods. Moreover, 
petitioners argue, because Eletrosilex's calculation was inaccurate and 
incomplete, the Department is required to use BIA for Eletrosilex's 
inventory holding gains/losses.
    Department's Position: We rejected Eletrosilex's submitted 
inventory holding gains and losses calculation because we found certain 
inconsistencies which render that calculation unacceptable. In its 
calculation, Eletrosilex failed to follow our questionnaire 
instructions to layer inventory by month, and identify when the 
finished goods and direct materials were produced or purchased (see 
question C.5 of the Department's questionnaire and cost verification 
exhibit 22). As explained with respect to RIMA in comment 23, 
Eletrosilex cannot shift to the Department the burden of correcting the 
calculation where, as here, doing so would require substantial 
inventory identification and the performance of numerous calculations. 
Thus, we have denied Eletrosilex and adjustment for inventory carrying 
gains/losses. Furthermore, we do not agree with petitioners that we 
must use BIA. There is no legal or policy precedent which requires the 
Department to resort to BIA when we deny an adjustment that a 
respondent failed to accurately and adequately substantiate.
    Comment 35: Eletrosilex argues that the preliminary results 
analysis memorandum shows that in making adjustments for secondary 
material replacement costs, the Department improperly transcribed 
numbers for the months of September and October under column ``b.''
    Department's Position: We agree, and corrected this error in these 
final results of review.
    Comment 36: Eletrosilex argues that the Department double-counted 
some of its G&A expenses. It claims that this occurred because of 
Eletrosilex's bookkeeping method. Eletrosilex states that it included 
in its variable and fixed overhead some of the salaries and costs 
attributable to administrative functions at its manufacturing facility 
at Copitao Eneas. However, Eletrosilex's auditors did not consider 
these costs to be variable and fixed factory overhead, and included 
them instead in G&A. Thus, they were included in both Eletrosilex's 
reported factory overhead and in the G&A expenses recorded on its 
audited financial statement. Because the Department's methodology for 
calculating G&A was to devise a ratio of G&A to cost of goods sold, 
utilizing figures drawn from the financial statements, and multiplying 
the ratio by Eletrosilex's COM (which includes overhead), Eletrosilex 
argues that the salaries and costs attributable to administrative 
functions at its manufacturing facility at Copitao Eneas were, in 
effect, double-counted. Therefore, these costs should be removed from 
the COM. Doing so would also lower Eletrosilex's calculated interest 
expenses, Eletrosilex argues, because these too were calculated by 
applying a ration to the COM.
    Petitioners argue that there is no evidence on the record of this 
review to support the claim that Eletrosilex included salaries and 
costs attributable to administrative functions at its Copitao Eneas 
facility in its reported fixed or variable overhead. This information 
was first submitted, petitioners argue, in Eletrosilex's case brief 
and, therefore, to accept this information would be a violation of 19 
CFR Sec. 353.31(a)(3).
    Department's Position: We reviewed the schedules provided by 
Eletrosilex and concur that our preliminary adjustment overstates cost. 
However, the Department does not believe that Eletrosilex's suggestion 
of reducing submitted COM is the best way to correct the cost 
overstatement. Instead, we have reduced the G&A figure used to 
calculate the Department's G&A factor by the amount of the salaries and 
costs attributable to administrative functions. We used this 
methodology because these production costs were correctly submitted as 
a cost of manufacturing. Furthermore, we adjusted the cost-of-sales 
figures used in both the G&A and interest factor calculation to account 
for Eletrosilex's reclassification of costs.
    With regard to petitioners' argument that Eletrosilex's information 
is untimely and therefore in violation of 19 CFR Sec. 353.31(a)(3), we 
have determined that the respondent's information is already on the 
record of this review. It can be found in cost verification exhibit 7 
and in exhibit 5 of the June 10, 1994 submission. Therefore, we have 
allowed this information to remain on the record of this review.
    Comment 37: Eletrosilex argues that the test for sales below cost 
was flawed due to errors in methodology, analysis, and transcription. 
First, it claims that each of the errors noted in comments 32-36 are 
applicable to the Department's computation of COP. Eletrosilex claims 
that the correction of these errors will result in a substantially 
reduced COP. Second, according to Eletrosilex, the Department erred in 
its calculation of the home market price to be compared to COP by 
deducting a charge for home market credit using the short-term interest 
rate charged by the state bank of Minas Gerais, rather than 
Eletrosilex's own actual short-term borrowing rate. Third, Eletrosilex 
argues that the Department erred in not comparing home market sales 
price at the time of sale to the COP for the month of sale. With 
hyperinflation, that comparison is truer than using the month of 
payment and a deflation index.
    Petitioners argue, with regard to the last point, that Eletrosilex 
reported in its November 1, 1993, questionnaire response (at 16) that 
the home market sales prices reported in its sales listing are 
``increased to incorporate the projected inflation rate between the 
date of sale and the actual date of payment.'' In light of this method 
of reporting, petitioners claim that it would be improper to compare 
Eletrosilex's unadjusted prices at the time of sale to its COP for the 
month of sale because it is the Department's practice to subtract 
inflation adjustments from the home market sales prices used in the COP 
comparison when those prices include adjustments for anticipated 
inflation (See Ferrosilicon from Brazil, Notice of Amended Final 
Determination of Sales at Less Than Fair Value, 59 FR 8598, February 
23, 1994) (Ferrosilicon from Brazil Amended Final Determination).
    Department's Position: With regard to Eletrosilex's first point, 
the Department applied to the cost test the same determinations that it 
made with respect to CV as described in our responses to comments 33-
36. The issue Eletrosilex raised in comment 32 does not apply to COP 
because we do not use any imputed values in the computation of COP. 
With respect to Eletrosilex's second point, we used the same interest 
rate to calculate credit (which we deducted from the price to be 
compared to COP) that we used in the computation of credit that we 
included in CV. Therefore, see Department's position to comment 32, 
where this issue is addressed with respect to CV. With regard to 
Eletrosilex's third point, we agree with petitioners that the record 
indicates that Eletrosilex's selling prices include an element for 
anticipated inflation between the date of sale and the date of payment, 
and that it would, therefore, be incorrect to compare Eletrosilex's 
unadjusted prices at the time of sale to the COP of the month of sale. 
See Ferrosilicon from Brazil Amended Final Determination. Hence, in 
these final results of review, as in the preliminary results of review, 
we have

[[Page 46776]]

compared Eletrosilex's home market prices to the COP of the month of 
payment.

Final Results of Review

    As a result of our analysis of the comments received, we determine 
that the following margins exist for the period July 1, 1992, through 
June 30, 1993:

------------------------------------------------------------------------
                                                                Margin  
                   Manufacturer/Exporter                      (percent) 
------------------------------------------------------------------------
CBCC.......................................................        16.81
Minasligas.................................................         0.00
Eletrosilex................................................         0.00
RIMA.......................................................        31.60
------------------------------------------------------------------------

    The Department shall determine, and the Customs Service shall 
assess, antidumping duties on all appropriate entries. Individual 
differences between USP and FMV may vary from the percentages stated 
above. The Department will issue appraisement instructions directly to 
the Customs Service.
    Furthermore, the following deposit requirements will be effective 
upon publication of these final results of review for all shipments of 
silicon metal from Brazil entered, or withdrawn from warehouse, for 
consumption on or after the publication date, as provided by section 
751(a)(1) of the Tariff Act, and will remain in effect until the final 
results of the next administrative review:
    (1) The cash deposits rates for the reviewed companies will be 
those rates listed above; (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 LTFV investigation, but the manufacturer is, the cash 
deposit rate will be the rate established for the most recent period 
for the manufacture of the merchandise; and (4) if neither the exporter 
nor the manufacturer is a firm covered by this or any previous review 
conducted by the Department, the cash deposit rate will be 91.06 
percent, the ``all others'' rate established in the LTFV investigation.
    This notice serves as a final 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 notice also serves as a reminder to parties subject to 
administrative protective order (APO) of their responsibility 
concerning the disposition of proprietary information disclosed under 
APO in accordance with 19 CFR 353.34(d). Timely written notification of 
the return/destruction of APO materials or conversion to judicial 
protective order is hereby requested. Failure to comply with the 
regulations and the terms of an APO is a sanctionable violation.
    This administrative review and notice are in accordance with 
section 751(a)(1) of the Tariff Act (19 U.S.C. Sec. 1675(a)(1)) and 19 
CFR Sec. 353.22.

    Dated: August 27, 1996.
Robert S. LaRussa,
Acting Assistant Secretary for Import Administration.
[FR Doc. 96-22679 Filed 9-4-96; 8:45 am]
BILLING CODE 3510-DS-M