[Federal Register Volume 61, Number 227 (Friday, November 22, 1996)]
[Notices]
[Pages 59407-59415]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-29936]


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DEPARTMENT OF COMMERCE
[A-351-820]


Ferrosilicon From Brazil; Final Results of Antidumping Duty 
Administrative 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 May 8, 1996, the Department of Commerce (the Department) 
published the preliminary results of its administrative review of the 
antidumping duty order on Ferrosilicon from Brazil. The review covers 
exports of this merchandise to the United States by one manufacturer/
exporter, Companhia de Ferro Ligas da Bahia (Ferbasa), for the period 
August 16, 1993 through February 28, 1995.
    We gave interested parties an opportunity to comment on our 
preliminary results. Based on our analysis of the comments received, we 
have revised our calculations for these final results.

EFFECTIVE DATE: November 22, 1996.

FOR FURTHER INFORMATION CONTACT:
Wendy Frankel, Office of AD/CVD Enforcement, Group II, Import 
Administration, International Trade Administration, U.S. Department of 
Commerce, 14th Street and Constitution Avenue, NW., Washington, DC 
20230; telephone: (202) 482-5849.

SUPPLEMENTARY INFORMATION: 

Applicable Statute and Regulations

    Unless otherwise indicated, all citations to the statute are 
references to the provisions effective January 1, 1995, the effective 
date of the amendments to the Tariff Act of 1930 (the Act) by the 
Uruguay Round Agreements Act (URAA). In addition, unless otherwise 
indicated, all citations to the Department's regulations are to the 
current regulations, as amended by the interim regulations published in 
the Federal Register on May 11, 1995 (60 FR 25130).

Background

    On May 8, 1996, the Department (the Department) published in the 
Federal Register (61 FR 20793) the preliminary results of its 
administrative review of the antidumping duty order on ferrosilicon 
from Brazil. The antidumping duty order on ferrosilicon from Brazil was 
published March 14, 1994 (59 FR 11769). The review covers the period 
August 16, 1993 through February 28, 1995.

Scope of the Review

    The merchandise subject to this review is ferrosilicon, a 
ferroalloy generally containing, by weight, not less than four percent 
iron, more than eight percent but not more than 96 percent silicon, not 
more than 10 percent chromium, not more than 30 percent manganese, not 
more than three percent phosphorous, less than 2.75 percent magnesium, 
and not more than 10 percent calcium or any other element.
    Ferrosilicon is a ferroalloy produced by combining silicon and iron 
through smelting in a submerged-arc furnace. Ferrosilicon is used 
primarily as an alloying agent in the production of steel and cast 
iron. It is also used in the steel industry as a deoxidizer and a 
reducing agent, and by cast iron producers as an inoculant.
    Ferrosilicon is differentiated by size and by grade. The sizes 
express the maximum and minimum dimensions of the lumps of ferrosilicon 
found in a given shipment. Ferrosilicon grades are defined by the 
percentages by weight of contained silicon and other minor elements. 
Ferrosilicon is most commonly sold to the iron and steel industries in 
standard grades of 75 percent and 50 percent ferrosilicon. Calcium 
silicon, ferrocalcium silicon, and magnesium ferrosilicon are 
specifically excluded from the scope of this review.
    Calcium silicon is an alloy containing, by weight, not more than 
five percent iron, 60 to 65 percent silicon, and 28 to 32 percent 
calcium. Ferrocalcium silicon is a ferroalloy containing, by weight, 
not less than four percent iron, 60 to 65 percent silicon, and more 
than 10 percent calcium. Magnesium ferrosilicon is a ferroalloy 
containing, by weight, not less than four percent iron, not more than 
55 percent silicon, and not less than 2.75 percent magnesium.
    Ferrosilicon is currently classifiable under the following 
subheadings of the Harmonized Tariff Schedule of the United States 
(HTSUS): 7202.21.1000, 7202.21.5000, 7202.21.7500, 7202.21.9000, 
7202.29.0010, and 7202.29.0050. Although the HTSUS subheadings are 
provided for convenience and customs purposes, our written description 
of the scope of this review is dispositive.
    Ferrosilicon in the form of slag is included within the scope of 
this review if it meets, in general, the chemical content definition 
stated above and is capable of being used as ferrosilicon. Parties that 
believe their importations of slag do not meet these definitions should 
contact the Department and request a scope determination.

Analysis of Comments Received

    We received case and rebuttal briefs from the petitioners, Aimcor 
and SKW Metals & Alloys, Inc. and from the respondent, Ferbasa. At the 
request of the petitioners, we held a hearing on June 26, 1996.
    Comment 1: The petitioners argue that Brazil's economy was 
hyperinflationary during the period of review (POR). According to the 
petitioners, over the 18\1/2\ month POR the inflation rate in Brazil 
was 3,927 percent which greatly exceeds the Department's 60 percent 
threshold for determining if an economy is hyperinflationary. 
Petitioners agree with Ferbasa, however, that during the six-month 
period (September 1994 through February 1995) for which Ferbasa 
reported sales and cost data, inflation rates in Brazil were below the 
hyperinflationary levels. Notwithstanding this fact, petitioners argue 
that inflation rates in Brazil were between 38.86 percent and 44.78 
percent per month during the preceding seven months, all of which are 
in the POR, and that Ferbasa's reported direct materials costs were 
distorted by this hyperinflation since the materials are inventoried 
and valued at the time of purchase, but not used in production until 
some later time.
    Petitioners claim that respondent's own data shows that monthly 
inventory costs increased dramatically over the inflation rate for this 
period and thus demonstrates the resultant distortion. To eliminate the 
distortive effects of hyperinflation on Ferbasa's direct materials 
costs during the POR, the petitioners argue that for the final results, 
the Department should follow its established hyperinflationary economy 
practice of determining monthly costs of production (COP), constructed 
values (CV) and normal value (NV).
    Citing the Final Determination of Sales at Less Than Fair Value: 
Silicon Metal from Brazil, 56 FR 26,979 (June 12, 1991) (Silicon Metal 
from Brazil, LTFV), the petitioners contend that the Department should 
follow its established practice and use replacement costs rather than 
historical costs when evaluating dumping from a hyperinflationary 
economy.
    Ferbasa asserts that in its April 10, 1996 submission it provided 
substantial evidence to support its contention that

[[Page 59408]]

Brazil was not a hyperinflationary economy during the relevant portion 
of this review period. Citing petitioners' June 10, 1996, case brief 
(p. 29), Ferbasa notes that petitioners acknowledged that Brazil's 
economy was not hyperinflationary during the six months for which 
Ferbasa reported home market sales and cost data. Ferbasa argues that 
for these reasons the Department should continue to use six-month 
weighted average costs for the final results of review.
    Department's Position: Petitioners seek to invoke the Department's 
practice in hyperinflationary economies, which calls for the use of 
replacement costs in calculating the cost of production. This 
methodology recognizes that in a hyperinflationary economy it is not 
useful to evaluate operating results and financial position in the 
local currency without restatement. Money loses purchasing power at 
such a rate that comparison of amounts from transactions and other 
events occurring at different times is misleading. In cases where the 
respondent experiences hyperinflation in the comparison market during 
the period of review (POR), the Department requires that the respondent 
report current costs for the calculation of COP and CV. This 
methodology entails valuing any materials used to produce the subject 
merchandise at the average purchase price of those materials during the 
month of consumption (i.e., the normal inventory value of raw materials 
is replaced by the average purchase price for the month in which the 
materials were consumed). Labor and overhead costs are reported at the 
actual monthly amount incurred during the month of shipment. See Final 
Determination of Sales at Less Than Fair Value: Silicomanganese from 
Venezuela, 59 FR 55,437, 55441 (November 7, 1994); Final Determination 
of Sales at Less Than Fair Value: Nitrocellulose from Yugoslavia, 55 FR 
34,946 (August 27, 1990) and Tubeless Steel Disc Wheels from Brazil 52 
FR 6947 (March 20, 1987).
    In the present case, the sales at issue occurred during the last 
six months of the review period (i.e., September 1, 1994 through 
February 28, 1995). The Brazilian economy experienced significant 
inflation from September 1993 through June 1994. However, based on our 
examination of the annualized rate of inflation for September 1994 
through February 1995, we have determined that there was no 
hyperinflation during this time, as the annualized rate of inflation 
for this six-month period was less than 20 percent. Petitioners' 
arguments that raw materials consumed during the segment of the review 
period where costs are calculated may have been purchased during a 
period of hyperinflation is speculative and not supported by facts on 
the record of this case. The home market sales in question occurred 
fully two months after the period of hyperinflation ended. We concluded 
that, based upon the company's inventory turnover rate of approximately 
one month, Ferbasa produced ferrosilicon for these sales at most 
approximately one month earlier (i.e., at a time when the Brazilian 
economy was not hyperinflationary). Therefore, because the record 
supports the conclusion that sales in question were produced in a non-
hyperinflationary period, we can reasonably conclude, absent evidence 
to the contrary, that the costs were not distorted by hyperinflation. 
Accordingly, consistent with the Department's policy, we have not 
applied a current cost methodology because hyperinflation did not 
affect the cost of the sales at issue. See the Preliminary Results of 
Antidumping Duty Administrative Review: Gray Portland Cement and 
Clinker from Mexico, 61 FR 51676, 51681 (October 3, 1996).
    Comment 2: The petitioners contend that Ferbasa failed to follow 
the Department's explicit instructions to report replacement costs for 
purposes of calculating COP and CV. The petitioners note that in its 
original cost response, Ferbasa stated that there were no differences 
between the costs maintained in Ferbasa's normal cost accounting and 
financial accounting system and the costs submitted to the Department. 
The petitioners further note that Ferbasa stated that the costs 
recorded in its accounting system are historical costs. According to 
the petitioners, Ferbasa stated that for purposes of reporting costs to 
the Department, it used a weighted-average monthly cost of inventory 
(that had not been adjusted for inflation) which the company explained 
``is essentially the weighted-average purchase price of each material 
at the time the material is placed in inventory.'' In other words the 
petitioners argue, Ferbasa reported historical material costs.
    Although Ferbasa stated that it had reported materials costs on a 
replacement cost basis in its supplemental cost response, petitioners 
assert that the reported direct materials costs in that response were 
identical to the costs reported in the original cost response. Finally, 
petitioners contend that had Ferbasa reported replacement costs, such 
costs would be expected to fluctuate at approximately the same rate as 
inflation; however, Ferbasa's reported materials costs did not appear 
to do this. Petitioners conclude, therefore, that Ferbasa did not 
report replacement costs.
    Ferbasa contends that the monthly materials cost data provided in 
its COP responses reflect current material input prices for each month. 
Ferbasa states that the petitioners' contented that Ferbasa's monthly 
direct materials costs from September 1994 through February 1995 far 
exceeded the rate of inflation of 10 percent is misleading and 
deceptive. According to Ferbasa, the petitioners wrongfully based their 
contention on the total consumption value of direct materials used in 
the production of ferrosilicon as reported in Exhibit D-14 of Ferbasa's 
March 27, 1996, supplemental COP response. Ferbasa argues that the 
total consumption value of each material input reported therein depends 
on the quantity of the material input used in the production of 
ferrosilicon and reveals nothing regarding the average price of these 
materials in each month. Thus, Ferbasa contends that the petitioners' 
assertion is without basis and should be rejected outright.
    Department's Position: The Department has determined not to treat 
Brazil as a hyperinflationary economy in this review and therefore it 
is not appropriate to use a replacement cost methodology for purposes 
of determining material costs. (See the Department's position with 
regard to Comment 1.) Thus, the failure to report replacement costs is 
moot because the information is not necessary.
    With regard to the costs reported by Ferbasa in its questionnaire 
response, we note that Ferbasa has repeatedly stated that it reported 
costs directly from its internal books and records; these books and 
records are kept in a manner that is consistent with Brazilian 
generally accepted accounting principles (GAAP). It is established 
Department practice to accept costs taken directly from a respondent's 
accounting system when that system is in accordance with the foreign 
country's GAAP and it is clear that the figures reported do not distort 
the dumping calculations. See section 773(f)(1)(A) of the Act and the 
Statement of Administrative Action (H.R. Doc. No. 316, Vol. I, 103rd 
Congress, 2nd Sess. (1994)) (SAA), pp. 164-165 See also, Finally 
Determination of Sales at Less Than Fair Value: Certain Pasta from 
Italy, 61 FR 30326, 30354 (June 14, 1996); Final Determination of Sales 
at Less Than Fair Value: Fresh Cut Roses From Columbia, 60 FR 6981 
(February

[[Page 59409]]

6, 1995) (Roses, LTFV); Final Determination of Sales at Less Than Fair 
Value: Small Diameter Circular Seamless Pipe from Italy, 60 FR 31981 
(June 19, 1995); Certain cut-to-Length Carbon Steel Plate from Germany: 
Final Results of Antidumping Duty Administrative Review, 61 FR 13834 
(March 28, 1996); and Final Determination of Sales at Less Than Fair 
Value: Certain Canned Pineapple Fruit Thailand, 60 FR 29553 (June 5, 
1995).
    Comment 3: According to the petitioners, Ferbasa repeatedly failed 
to comply with the Department's explicit and repeated instructions to 
prepare a worksheet reconciling the reported cost of manufacturing 
(COM) for ferrosilicon to its internal books and records. The 
petitioners argue that Ferbasa's failure to provide this reconciliation 
creates serious impediment to proper analysis of the validity of 
Ferbasa's reported costs.
    Ferbasa contends that the petitioners' allegation results from a 
basic misunderstanding of Ferbasa's reporting methodology, since, as 
stated in its March 1, 1996 COP response, Ferbasa affirms that the COM 
reported to the Department in response to the dumping questionnaire 
reflects the values in its regular accounting records (i.e., the 
monthly inventory value and the reported monthly COMs of ferrosilicon 
are the same).
    Department's Position: As we noted earlier, Ferbasa has stated in 
various earlier submissions that the cost figures reported to the 
Department directly reflect the costs recorded in its financial 
statements and thus no reconciliation is necessary since the values are 
the same. It is established Department practice to accept costs taken 
directly from a respondent's accounting system when that system is in 
accordance with the foreign country's GAAP and it is clear that the 
figures reported do not distort the dumping calculations. See the 
Department's Position with regard to Comment 2.
    Comment 4: Citing section 776(a)(2) of the Act, the petitioners 
argue that the statute requires the Department to use the facts 
otherwise available ``if an interested party * * * withholds 
information that has been requested [or] significantly impedes a 
proceeding.'' Citing Sparklers from the People's Republic of China; 
Preliminary Results of Antidumping Duty Administrative Review, 61 FR 
15,464-5 (April 8, 1996), petitioners contend, moreover, that the 
statute codifies the Department's practice of applying an adverse 
inference in selecting from the facts otherwise available where a party 
has ``failed to cooperate by not acting to the best of its ability to 
comply with a request for information.''
    The petitioners contend that Ferbasa failed to comply with the 
Department's specific information requests and withheld necessary 
information available to it, thus significantly impeding this 
proceeding. More specifically, the petitioners contend that Ferbasa 
failed to provide: Materials replacement costs, a reconciliation of its 
reported costs to the inventory values in its normal books and records, 
supporting documentation for the reconciliation, and taxes on 
electricity. In addition, the petitioners assert that Ferbasa made 
misleading and conflicting statements regarding the basis of its 
reported costs. According to the petitioners, either Ferbasa did not 
report replacement costs, or did not provide the necessary 
reconciliation. Thus, petitioners conclude, under either scenario, 
there exists a fundamental deficiency in Ferbasa's response that 
``invalidates the reported data and prevents the Department from making 
a proper dumping margin calculation.'' (Petitioners brief at 15).
    For these reasons, argue petitioners, the Department should find 
Ferbasa to be a noncooperative respondent and should establish a margin 
based on the total adverse facts available.
    Ferbasa contends that the petitioners' assertion that the 
Department should find Ferbasa a noncooperative respondent and 
determine a dumping margin for Ferbasa based on the total adverse facts 
available is without basis and should be rejected outright. Ferbasa 
contends that it has fully cooperated with the Department by responding 
to all the instructions in the original and supplemental questionnaires 
in a timely manner. Finally, Ferbasa notes that its sales and cost of 
production responses contain detailed information which reconciles to 
it's financial statements.
    Department's Position: As noted in the Department's Position with 
regard to Comments 2 and 3, we do not agree with the petitioners' 
assertion that Ferbasa has failed to provide appropriate cost data. Nor 
do we agree that Ferbasa failed to comply with the Department's 
requests to a degree that results in a significant impediment to this 
proceeding. As discussed below, there are several items for which we do 
not have complete information on the record. Where this has occurred we 
have used the facts otherwise available to fill these minor gaps as 
stipulated by section 776(a)(2) of the Act. Because the gaps are not 
substantial and thus do not affect the integrity of the response to the 
missing items. In addition, we note that these facts available 
insertions are non-adverse, as we did not find that Ferbasa ``failed to 
cooperate by not acting to the best of its ability.'' See, Final 
Determination of Sales at Less Than Fair Value: Pasta from Italy, 61 FR 
30326, 30329 (June 14, 1996).
    We address the individual items for which we applied facts 
available in our discussions below in response to the comments raised 
by the respondent and the petitioners. However, because we used price-
to-price comparisons for the preliminary results of review,neither 
party addressed the issue of profit for purposes of calculating CV. For 
profit, we used an alternative method under section 773(e)(2)(B)(iii) 
of the Act, because we had no information that would permit us to use 
any of the other alternatives under section 773(e)(2). We could not 
calculate the ``profit cap'' prescribed by section 773(e)(2)(B)(iii) 
based on sales for consumption in the ``foreign country'' of 
merchandise that is in the same general category of products as the 
subject merchandise because we had no such information. Instead, we 
applied section 773(e)(2)(B)(iii) on the basis of the facts available 
(section 776(b)( of the Act). The only information available for these 
final results for Ferbasa was the profit realized by the respondent as 
shown in the company's 1994 fiscal year audited financial statement.
    Comment 5: The petitioners contend that in the preliminary results 
the Department improperly added the imputed credit expenses that 
Ferbasa reported in its revised home market sales listing to Ferbasa's 
home market prices before using those prices in its sales-below-cost 
comparison test and in determining NV.
    Petitioners assert that the Department calculates home market 
credit expenses solely for the purpose of making a circumstance-of-sale 
adjustment for differences between home market and U.S. prices relating 
to terms of payment; no imputed credit expense adjustment to home 
market price is made for comparison of home market prices to COP.
    Petitioners note that, in the preliminary results analysis 
memorandum, the Department stated that Ferbasa's reported credit costs 
represent ``upward adjustments to price that Ferbasa made when the 
payment terms of sale were in excess of 30 days,'' which should be 
included in the calculation of home market prices. However, petitioners 
also note that for sales with payment terms in excess of 30 days, 
Ferbasa charged its customers for late payment terms and included those 
charges in the reported prices.

[[Page 59410]]

    Thus, petitioners argue, the Department should not add imputed 
credit expenses to home market prices for either the calculation of NV 
or for comparison of home market prices to COP.
    Ferbasa contends that the Department incorrectly added an amount 
for credit expenses to the reported home market prices in its 
calculation of NV. Ferbasa suggests that the Department correct this 
error by subtracting the home market credit expense from the reported 
home market sales price in the calculation of NV.
    Department's Position: We agree with petitioners and respondent 
that the Department inappropriately added credit expenses to home 
market prices for purposes of comparing home market prices to COP and 
calculating NV. For the preliminary results of review, we inaccurately 
concluded that the reported imputed home market credit expenses 
represented a charge by Ferbasa to its customers on sales with payment 
terms in excess of 30 days which should be added to home market prices. 
However, we have reviewed the record and determined that charges to 
customers with such payment terms were already included in the prices 
reported by Ferbasa.
    We also agree with petitioners that no imputed expense adjustments 
are made to home market prices for comparison to COP. See the 
Department's March 25, 1994, Policy Bulletin 94.6 Treatment of 
adjustments and selling expenses in calculating the cost of production 
(COP) and constructed value (CV). Therefore, for these final results of 
review we have not added any home market credit expenses to home market 
sales prices in calculating NV or in comparing home market prices to 
COP.
    Comment 6: The petitioners argue that it is inappropriate for the 
Department to calculate home market imputed credit expenses for Ferbasa 
using gross unit prices which are inclusive of credit revenues and ICMS 
and IPI taxes.
    Petitioners state that since Ferbasa does not incur an opportunity 
cost with regard to late payment charges, such charges should not be 
included in the basis for the calculation of imputed credit expenses. 
Rather, the petitioners argue that imputed credit expenses should be 
calculated by applying the short-term borrowing rate to the period 
during which credit is extended to the purchaser against a price that 
is net of late payment charges.
    Citing the Final Determination of Sales at Less Than Fair Value: 
Calcium Aluminate Cement, Cement Clinker and Flux From France (Calcium 
Aluminate from France, LTFV), 58 FR 14,13, 14,139, 14,146 (March 25, 
1994), petitioners maintain that with regard to taxes, it is the 
Department's established practice to exclude taxes from the prices used 
in calculating imputed credit expenses. Thus, for the final results, 
the petitioners contend that the Department should exclude the amounts 
Ferbasa charged its customers for granting late payments terms and the 
amount of ICMS and IPI taxes paid from the home market prices used to 
calculate home market imputed credit expenses.
    Ferbasa argues that in the final results the Department should 
continue to use the actual home market credit expenses as reported in 
the questionnaire response. In addition, Ferbasa supports the 
Department's preliminary calculation of imputed credit expenses, noting 
that a seller incurs an opportunity cost with regard to the total sales 
prices of its merchandise.
    Department's Position: We agree in part with both petitioners and 
respondent. Concerning the issue of taxes, we note that there is no 
statutory or regulatory basis for including these taxes in the 
calculation of the credit adjustment. See Calcium Aluminate from 
France, LTFV. While there may be an opportunity cost associated with 
extending credit on the payment of prices inclusive of taxes, that fact 
alone is not a sufficient basis for the Department to make an 
adjustment. We note that virtually every expenses associated with sales 
is paid for at some point after the cost is incurred. Accordingly, for 
each post-service payment, there is also an opportunity cost. Thus, to 
allow the type of adjustment suggested by respondent would imply that 
in the future the Department would be faced with the impossible task of 
trying to determine the opportunity cost of every freight charge, 
rebate, and selling expense for each sale reported. This exercise would 
make our calculations inordinately complicated, placing an unreasonable 
and onerous burden on both respondents and the Department. See also, 
Final Determination of Sales at Less Than Fair Value: Sulfur Dyes, 
Including Sulfur Vat Dyes, from the United Kingdom, 58 FR 3253 (January 
8, 1993). With regard to late payment charges, we note that Ferbasa has 
stated that these charges reflect the amount actually paid by the 
customers as part of the invoice price. The Department calculates 
imputed credit expenses to capture the opportunity cost associated with 
not having received payment and not having the merchandise. The fact 
that the invoice price is increased when the payment terms are in 
excess of 30 days does not negate the fact of the opportunity cost 
associated with the transaction.
    Accordingly, we have recalculated home market imputed credit 
expenses by excluding only the ICMS and IPI taxes included in gross 
home market prices.
    Comment 7: The petitioners note that when the Department performs 
an analysis of whether home markets sales were sold below cost, it 
compares home market prices and COP on an ``apples-to-apples'' basis. 
Accordingly, the Department either includes or excludes an item from 
both the COP and the home market prices used in the comparison. The 
petitioners contend, however, that the Department's preliminary results 
did not reflect this practice, because the home market prices used by 
the Department in the sales-below-cost comparison included ICMS and IPI 
taxes but the COP was exclusive of these same taxes. The petitioners, 
therefore, contend that the comparison was not an ``apples-to-apples'' 
basis.
    To correct this error, petitioners assert that the Department 
should exclude the amount of these taxes from both the home market 
prices and the COP in the sales-below-cost test.
    Department's Position: We agree with petitioners that the 
Department erroneously compared a tax-inclusive home market price to a 
tax-exclusive COP for purposes of determining sales below cost. In 
order to effectuate a fair comparison, it is the Department's practice 
to compare prices and COP on the same basis. As discussed in the March 
25, 1994 policy bulletin 94.6, ``[b]oth the net COP and the net home-
market prices should be on the same basis * * * otherwise, the 
comparison would be distorted.'' Consequently, for these final results 
of review, we have corrected our calculations and have compared a tax-
exclusive COP to tax-exclusive home market prices.
    Comment 8: The petitioners contend that in reporting transfer 
prices for purchases of eucalyptus charcoal from affiliated companies, 
Ferbasa ignored the Department's instructions to ``report the value of 
the actual eucalyptus charcoal consumed in production on the basis of 
actual costs of affiliated producers.'' The petitioners further contend 
that Ferbasa failed to respond to the Department's instructions to 
report the value of its iron ore purchased from affiliated producers on 
the basis of the prices charged for iron ore by unaffiliated suppliers.
    The petitioners argue that these instructions are in accordance 
with Department practice and sections 773(f) (2) and (3) of the 
statute, which state

[[Page 59411]]

that if the transfer price of a major input ``is less than the cost 
production of such input'' the Department may determine the value of 
the input ``on the basis of the * * * cost of production.''
    Instead, according to the petitioners, Ferbasa calculated two 
incorrect adjustments to all materials costs, based on ratios relating 
solely to costs and prices of eucalyptus charcoal and iron ore.
    For the final results, the petitioners contend that the Department 
should calculate monthly weighted-average costs of eucalyptus charcoal 
based on the COP and volume of eucalyptus charcoal purchases from 
affiliated suppliers and the price and volume of eucalyptus charcoal 
purchases from unaffiliated suppliers.
    To determine the cost of iron ore consumed by Ferbasa in each 
month, petitioners contend that the Department should: first, determine 
the total monthly consumption of iron ore by dividing the reported 
total value of iron ore used in ferrosilicon production by the 
weighted-average input price reported by Ferbasa for each month; 
second, multiply the resultant monthly consumption of iron ore by the 
weighted-average monthly price paid for iron-ore from unaffiliated 
suppliers to derive the monthly total cost of iron ore; and third, 
divide this amount by the production quantity in the month to determine 
the per-unit cost of iron ore.
    Ferbasa contends that the petitioners' comments reflect a basic 
misunderstanding of the methodology Ferbasa used to calculate its 
reported eucalyptus charcoal and iron ore costs. Ferbasa states that it 
has exhaustively explained its calculation methodology in its original 
and supplemental COP responses. Moreover, Ferbasa argues, the 
Department found this methodology reasonable and accepted it for its 
preliminary results. Ferbasa notes, however, that if the Department 
should decide in the alternative to recalculate the multipliers based 
on the ``total volume'' of charcoal eucalyptus and iron ore purchased 
from affiliated suppliers, it provided this information in Exhibits D-
13 and D-15 of the supplemental COP response.
    Department's Position: We agree with petitioners that Ferbasa 
initially misreported the material costs for eucalyptus charcoal and 
iron ore by partly relying on affiliated party transfer prices for 
these inputs that did not represent arms-length prices. We also agree 
that Ferbasa then inappropriately adjusted all materials costs by using 
multipliers based on purchases of eucalyptus charcoal and iron ore.
    In accordance with sections 773(f)(2) and (3) of the Act, the 
Department's practice is to first test whether transfer prices between 
affiliated suppliers represent arm's-length transactions. For major 
inputs we use the transfer price if it is shown to be at arm's length 
and not below the cost of production; however, we use the affiliated 
supplier's cost of producing the input when the amount represented as 
the transfer price of such input is less than the cost of producing the 
input. See Notice of Final Determination of Sales At Less Than Fair 
Value: Large Newspaper Printing Presses and Components Thereof; Whether 
Assembled or Unassembled from Japan, 61 FR 38129, 38162 (July 23, 
1996), and Certain Cold-Rolled and Corrosion-Resistant Carbon Steel 
Flat Products from Korea: Preliminary Results of Antidumping Duty 
Administrative Reviews, 61 FR 51882, 51887 (October 4, 1996).
    After reviewing the information submitted by Ferbasa in its 
original and supplemental COP responses, we have determined that (1) 
the transfer prices from the affiliated supplier used by Ferbasa in its 
calculation of reported materials costs for eucalyptus charcoal were 
below the supplier's cost of producing that major input, and (2) the 
transfer prices from the affiliated supplier for iron ore were not 
representative of market prices for that product. Consequently, we have 
recalculated Ferbasa's reported material costs for eucalyptus charcoal 
and iron ore.
    Ferbasa stated that its prior submissions to the Department contain 
information sufficient for the Department to recalculate the reported 
material costs for these inputs, if necessary. We note, however, that 
although Ferbasa did provide certain data, it did not provide all the 
necessary information for such a recalculation. With regard to 
eucalyptus charcoal, Ferbasa provided monthly purchase prices and 
quantities from unaffiliated suppliers and monthly purchase quantities 
and COPs for affiliated suppliers. Concerning iron ore, Ferbasa 
provided monthly purchase prices and quantities from unaffiliated 
suppliers and monthly purchase quantities from affiliated suppliers. 
However, Ferbasa did not provide monthly inventory quantities and 
values for either input. Since we are not calculating materials costs 
using a replacement cost methodology, we would need the inventory 
quantities and values in order to properly recalculate the cost of 
these materials consumed in the production of ferrosilicon during the 
six-month period of September 1994 through February 1995. Thus, we are 
not able to calculate the actual cost of these two materials used in 
production during this six-month period. Therefore, we have used the 
facts otherwise available to determine the costs for eucalyptus 
charcoal and iron ore used in the production of the subject 
merchandise.
    As the facts available, we have adjusted Ferbasa's eucalyptus 
charcoal costs by the monthly ratio of the affiliate's cost of 
producing this input to the weighted-average purchase price Ferbasa 
paid to affiliated and unaffiliated suppliers for the input as reported 
by Ferbasa in Appendix D-5 of its COP response. Similarly, we have 
adjusted Ferbasa's iron ore costs by the monthly ratio of average 
monthly purchase price charged by Ferbasa's unaffiliated supplier to 
the weighted-average purchase price Ferbasa paid to affiliated and 
unaffiliated suppliers for the input as reported by Ferbasa in Appendix 
D-15 of its supplemental COP response.
    Comment 9: The petitioners contend that in calculating the selling, 
general and administrative (SG&A) expenses included in COP, the 
Department used Ferbasa's interim, unaudited and unconsolidated 
financial statement which covers only the first two months of 1995.
    In addition, in determining interest expenses, petitioners contend 
that the Department divided the sum of Ferbasa's reported net financing 
expenses for the six-month period for which Ferbasa reported sales and 
cost data by the sum of the monthly cost of sales for that period. 
Thus, petitioners argue, by failing to calculate these ratios based on 
annual numbers, the Department has acted contrary to its established 
practice. Citing Silicon Metal from Brazil, LTFV, at 26,985, 
petitioners state that ``G&A expenses are period costs which should be 
based on the annual period in which they were incurred,'' and claim the 
same is true for interest expenses. Moreover, according to petitioners, 
in calculating these ratios, Department practice requires use of a 
consolidated, audited financial statement for the fiscal year that most 
closely correlates to the POR. Petitioners conclude, therefore, that 
the Department should calculate the SG&A and interest expense ratios 
based on Ferbasa's 1994 audited financial statement since that period 
most closely approximates the six-month period for which Ferbasa 
provided sales and cost data.
    Furthermore, petitioners emphasize that the Department should use 
the constant currency figures from the financial statement, which have 
been adjusted to eliminate the distortive

[[Page 59412]]

effects of hyperinflation experienced by Brazil during the first half 
of 1994.
    Ferbasa argues that there are two basic flaws in petitioners' 
proposition that the Department should use the constant currency 
figures from the 1994 fiscal year (FY) audited financial statement. 
First, Ferbasa claims that the figures on the audited statement are the 
expenses of the consolidated company (Ferbasa and its subsidiaries) and 
second, the selling expense line item includes expenses such as freight 
charges and commissions for outside parties that are not related to the 
selling expenses incurred by Ferbasa.
    Additionally, Ferbasa contends that in its COP calculations, the 
Department incorrectly used a two-month SG&A cost ratio provided in 
Ferbasa's September 21, 1995 questionnaire response. According to 
Ferbasa, for the final results of review, the Department should use the 
six-month (September 1994-February 1995) weighted-average SG&A ratio 
reported in the COP response. This would be consistent with the 
Department's use of six-month weighted-average COMs and financing 
expenses and the Department's determination that Brazil was not a 
hyperinflationary economy during this period.
    Department's Position: We agree with petitioners that Department 
should use the annual consolidated income statement adjusted for 
inflation to determine the interest expense ratio. However, it is the 
Department's practice to base G&A expenses on the unconsolidated 
financial statement of the company. In this case, we have relied on the 
1994 fiscal year unconsolidated audited financial statement to 
calculate G&A expenses, and the consolidated statement to determine the 
interest expense ratio. The Department's practice is to use the 
consolidated income statement for finance expenses because debt is 
fungible and corporations can shift debt and its related expenses 
toward or away from subsidiaries in order to manage profit. See Silicon 
Metal from Brazil: Final Results of Antidumping Duty Administrative 
Reviews, 59 FR 42,806 42,807 (August 19, 1994).
    Since the value of the Brazilian currency changed significantly for 
the first half of 1994, costs which were incurred at the end of the 
year are not comparable to costs incurred at the beginning of the year. 
Without the application of indexing, the calculation of general 
expenses for periods of such significant inflation does not produce a 
meaningful result. To calculate a meaningful general expense amount, it 
is necessary to restate each month's general expenses in equivalent 
terms, that is, the currency value at a given point in time, such as 
the end of the year. This procedure has already been accomplished and 
reported in the constant currency column in Ferbasa's income statement. 
As explained in Doing Business in Brazil (Price Waterhouse, 1994), 
constant currency amounts have been adjusted to price levels current at 
the balance sheet date. The constant currency column in the financial 
statement, which reflects an adjustment for the potentially distortive 
effects of inflation, offers a more accurate measure of Ferbasa's 
production costs. In an inflationary environment such as Brazil's 
during a portion of the POR, money loses its purchasing power at such a 
rate that unadjusted comparisons of transactions that have occurred at 
different times during the accounting year are misleading. As further 
described in Doing Business in Brazil, the constant currency financial 
statement is ``used by corporate management to monitor and compare 
results of operations and by financial analysts to evaluate the 
performance of listed corporations.'' Any financial statement which 
corrects for potential distortions, such as those caused by inflation, 
are preferable to financial statements which include such distortions.
    Further, due to the periodic nature of such costs, we have followed 
the Department's established practice of calculating G&A and interest 
expenses using the annual audited income statement for the fiscal year 
covering the greatest part of the POR. See Final Determination of Sales 
at Less Than Fair Value: Oil Country Tubular Goods from Argentina, 60 
FR 33,539, 33,549 (June 28, 1995) and Final Determination of Sales at 
Less Than Fair Value: Hot-Rolled Carbon Steel Flat Products, Cold-
Rolled Carbons Steel Flat Products, Corrosion-Resistant Carbon Steel 
Flat Products, and Cut-to-Length Carbon Steel Plate from Canada, 58 FR 
37105, 37133 (July 9, 1993). To calculate G&A and interest expenses for 
purposes of COP and CV in these final results, we have therefore used 
the constant currency values from the 1994 audited financial statement 
covering the greatest part of the period for which we are using price 
and other cost data.
    With regard to the calculation of selling expenses for purposes of 
CV, in accordance with established Department practice, we have used 
the sale-specific selling expenses reported by Ferbasa in its response 
to the Department's sales questionnaire. See, Policy Bulletin 94.6, 
Treatment of adjustments and selling expenses in calculating the cost 
of production (COP) and (CV).
    Comment 10: The petitioners asset that in determining the net 
interest expenses to be included in COP and CV, it is the Department's 
established practice to reduce the amount of total interest expenses 
only by interest income from short-term investments derived from 
working capital. The petitioners further assert that if a respondent 
fails to demonstrate that its claimed offset is related solely to 
short-term income, the Department's practice is to disallow the claimed 
offset.
    Petitioners allege that for this review, Ferbasa failed to 
demonstrate that its claimed offset was related to short-term interest 
income. Despite Ferbasa's acknowledgement that two of the six items 
that comprise its interest income category on the financial statement 
do not qualify as short-term interest income for purposes of dumping 
calculations, petitioners argue that Ferbasa failed to make an 
affirmative demonstration that the remaining four categories do relate 
solely to short-term interest income.
    Thus, the petitioners conclude that the Department should not allow 
any offset for short-term interest income to the total interest 
expenses recorded in Ferbasa's financial statement.
    Ferbasa opposes the petitioners' recommendation that the Department 
deny an offset adjustment to claimed interest expenses. In responding 
to petitioners' argument that it failed to adequately demonstrate that 
short-term nature of the four categories of interest income for which 
it claims an adjustment, Ferbasa claims that the four categories of 
income are related to interest income received from (1) savings or 
checking accounts, (2) late payments of customer accounts receivables, 
(3) short-term investment transactions, and (4) monetary correction of 
gains on receivables. Ferbasa emphasized that these four categories are 
all of a short-term nature. Accordingly, Ferbasa argues, the Department 
should continue to grant this adjustment for the final results of 
review.
    Department's Position: The Department generally considers Ferbasa's 
response with regard to its calculation of interest expense to be in 
compliance with the statute and with the Department's questionnaire. In 
its March 27, 1996 supplemental COP response, Ferbasa provided a 
worksheet demonstrating its calculation of net interest expenses, 
specifically noting which categories of interest income are not derived 
from short-term investments and were therefore excluded from its 
calculation of net interest expenses.

[[Page 59413]]

There is no information on the record that would support petitioners' 
claim that Ferbasa overstated its short-term interest income and 
consequently understated its interest expense. However, in preparing 
its reported net interest expenses, Ferbasa used the historical cost 
figures from the consolidated 1994 fiscal year audited financial 
statement. As discussed in the Department's Position with regard to 
Comment 9 above, it is the Department's practice, when calculating 
general costs on an annual basis for an economy that experienced 
hyperinflation during that annual period, to rely on values reported on 
a constant currency basis. Therefore, it was necessary to recalculate 
Ferbasa's net interest expenses for these final results of review. 
Because Ferbasa's worksheet did not provide detail concerning short-
term vs. long-term interest income based on the constant currency 
values recorded in its audited financial statements, the Department 
relied on the facts otherwise available to calculate a net interest 
expense ratio. As the facts otherwise available the Department (1) 
determined the ratio of short-term income to total interest income as 
provided based on the historical cost figures, and (2) applied this 
ratio to the total interest income value recorded in the constant 
currency portion of the financial statement to determine the short-term 
interest income offset to total interest expenses.
    Comment 11: The petitioners argue that the Department erred in its 
calculation of COP by relying on Ferbasa's reported allocation of 
indirect expenses (consisting of fixed and variable factory overhead) 
over installed capacity. Petitioners contend that installed capacity is 
not an appropriate basis for allocating indirect expenses because it is 
a theoretical parameter that does not reflect the actual operations of 
a company.
    The petitioners contend that Ferbasa reported final numbers already 
allocated to the production of ferrosilicon but failed to provide a 
worksheet that would explain how those expenses were allocated. In 
addition, petitioners suggest that information provided by Ferbasa on 
the record does not contain sufficient detail to allow the Department 
to properly allocate these expenses. Therefore, the petitioners 
conclude that the Department should resort to the facts otherwise 
available and determine an amount for indirect expenses by multiplying 
the sum of Ferbasa's reported monthly materials, labor, energy, and 
utility costs by the variable and fixed overhead ratio provided in the 
petitioners' sales-below-cost allegation.
    Ferbasa contests petitioners' allegations that it did not properly 
report and allocate its indirect (variable and fixed factory overhead) 
expenses. Ferbasa claims that it provided itemized costs in its 
supplemental COP response and that those costs were incurred by the 
indirect cost centers related to the production of ferrosilicon. 
Finally, Ferbasa states that it has reported these costs in the same 
manner as they are allocated in its accounting system (i.e., on the 
basis of installed capacity) and in accordance with the provisions set 
forth in section 773(f)(1)(A) of the antidumping statute. In 
conclusion, Ferbasa argues that the Department should accept its 
reported allocation of these expenses for the final results of review.
    Department's Position: The Department considers Ferbasa's response 
with regard to the calculation of fixed and variable factory overhead 
to be in accordance with the Department's questionnaire and the 
statute. Ferbasa reported these costs in the same manner in which it 
records them in its financial statement, which it maintains in 
accordance with Brazilian GAAP. As stated in the Department's Position 
to Comment 2, it is the Department's established practice to accept 
costs taken directly from a respondent's accounting system when that 
system is in accordance with the foreign country's GAAP and it is clear 
that the figures reported do not distort the dumping calculations. In 
its March 1, 1996, COP questionnaire response Ferbasa states that the 
per unit monthly variable and fixed overhead costs were calculated by 
dividing the total monthly costs by the total monthly quantity 
produced. Ferbasa further states that the production of ferrosilicon is 
a continuous process and that the company had no idle assets and 
incurred no expenses for idle equipment, closures or shutdowns during 
the POR. See pp. D-20, 25, and 34.
    We agree with the petitioners that the Department does not normally 
accept installed capacity as an allocation factor for costs because it 
does not necessarily reflect the actual operations of the company. 
However, based on the information provided by Ferbasa, as discussed 
above, in this instance installed capacity does in fact reflect the 
operations of the company during this period. Therefore we have 
determined that Ferbasa's methodology is an acceptable allocation basis 
for these costs during this period.
    Comment 12: Petitioners contend that in calculating CV the 
Department must include an amount for ICMS and IPI taxes incurred on 
material inputs since the statute requires the inclusion of taxes that 
are not remitted or refunded upon exportation. See, section 773(e) of 
the Act.
    The petitioners further contend that although the Department 
instructed Ferbasa to report the net per-unit amounts Ferbasa paid for 
all internal taxes imposed on purchases of direct materials used to 
produce ferrosilicon during the POR, Ferbasa only reported ranges of 
tax rates for ICMS and IPI taxes. Petitioners also argue that in 
calculating the monthly per-unit amounts incurred for ICMS and IPI 
taxes, Ferbasa inappropriately based its calculation on the total value 
of all raw materials purchased rather than on the value of raw 
materials consumed in the production of ferrosilicon during the POR. 
Petitioners conclude that this resulted in Ferbasa's reporting tax 
amounts that do not correspond to the cost of materials consumed.
    Because Ferbasa failed to report the amount of taxes for material 
consumed, the petitioners urge the Department to resort to the facts 
otherwise available in the calculation of CV and apply the highest ICMS 
and IPI tax rates reported by Ferbasa of 17 and 15 percent, 
respectively.
    Ferbasa argues that petitioners' contentions on this issue are 
without merit since the URAA explicitly amended the antidumping law to 
remove consumption taxes from NV and eliminate the addition of taxes to 
U.S. price in order to ensure that no consumption tax is included in 
either market's price (i.e., to achieve tax neutrality). Specifically, 
section 773(a)(6)(B) of the Act requires the Department to reduce NV by 
the amount of indirect taxes imposed on the foreign product or 
components thereof that have been rebated or not collected, to the 
extent that such taxes are added to or are in the price of the foreign 
like product. Ferbasa argues, as such, where CV is used as NV, the 
Department should not include consumption taxes in the NV.
    Ferbasa also responds to petitioners' claim that Ferbasa's 
reporting methodology for calculating taxes is flawed and should be 
rejected. Ferbasa contends that it calculated the tax rates based on 
monthly purchases and then applied that rate to the value of monthly 
consumption in order to derive the reported monthly taxes associated 
with the production of ferrosilicon during the POR.
    Department's Position: We agree with Ferbasa that it reported ICMS 
and IPI taxes in a manner that is in accordance with Department 
practice.

[[Page 59414]]

    Further, we have determined that the ICMS and IPI taxes must be 
added to the CV of the product under review. Section 773(e) of the Act 
requires the deduction from CV of any internal taxes applicable 
directly to material inputs or their disposition which are remitted or 
refunded upon exportation of the subject merchandise. The ICMS and IPI 
taxes were paid on material inputs for the production of ferrosilicon 
by Ferbasa. In so far as Brazil does not rebate upon export the ICMS 
and IPI taxes paid on the inputs used in the production of finished 
ferrosilicon, the cost of those exports entering the United States must 
include the value-added taxes (VAT) which were paid on the inputs, 
regardless of when or how taxes are recovered on home market sales. It 
is important to note that indirect taxes such as those at issue here 
are properly viewed as being imposed upon and ``borne by'' the product, 
not the producer. Thus, the fact that a producer may recover the total 
taxes it paid by virtue of unrelated home market transactions is 
irrelevant to the question of whether the exported product continues to 
bear the tax burden. Therefore, the tax amounts must be added to CV to 
properly reflect the true costs and expenses borne by this product. See 
Final Results of Antidumping Duty Administrative Reviews: Silicon Metal 
Brazil, 61 FR 46763 (September 5, 1996).
    Comment 13: Petitioners state that Ferbasa pays ICMS taxes on its 
purchases of electricity and that for purposes of calculating CV, such 
taxes should be included in the reported electricity costs. Petitioners 
argue that since Ferbasa failed to report these taxes in its 
submissions, the Department should apply the highest ICMS tax rate 
(i.e., 17 percent) as the facts otherwise available to calculate an 
amount of taxes incurred on electricity and incorporate this amount in 
the calculation of CV.
    Department's Position: We agree with petitioners that ICMS taxes 
paid on electricity for the production of ferrosilicon must also be 
included in the CV of this product. See the Department's Position on 
Comment 12 above. Because Ferbasa did not provide any information with 
regard to its payment of taxes on electricity for the production of 
ferrosilicon, we have determined to use the facts available to fill 
this gap. Ferbasa reported that during the POR it paid ICMS taxes of up 
to 17 percent on material inputs. However, since Ferbasa did not 
provide specific data with regard to ICMS taxes paid on electricity, we 
have used publicly available data to fill the gap. Specifically, we 
used information contained in Price Waterhouse's publication Doing 
Business in Brazil, July 1994, which shows that the intrastate ICMS 
rate applied to electricity was 18 percent. Therefore as the facts 
otherwise available, we have applied the 18 percent intrastate ICMS tax 
rate to the electricity costs reported by Ferbasa and included these 
figures in our calculation of CV.
    Comment 14: Petitioners argue that in its calculations for the 
preliminary results, the Department used an incorrect exchange rate for 
converting amounts reported in Reais to U.S. dollars.
    Department's Position: We agree with petitioners. The Department 
inadvertently used an inverted exchange rate for converting amounts 
reported in Reais to U.S. dollars. We have corrected this mistake for 
the final results of review.
    Comment 15: Ferbasa contends that the Department incorrectly used 
the monthly interest rate reported in Ferbasa's September 21, 1995 
submission for the calculation of Ferbasa's imputed home market credit 
expense. Ferbasa contends that the Department should have used the 
monthly interest rates reported in Ferbasa's December 1, 1995 
supplemental sales response which reflect Ferbasa's actual short-term 
borrowings during the POR.
    Department's Position: We disagree in part with Ferbasa. Although 
Ferbasa did provide revised monthly interest rates based on its actual 
short-term borrowings, we note that these rates were not calculated in 
accordance with accepted Department methodology. Ferbasa calculated the 
reported rate as a ratio of total monthly interest payments to the 
number of ``business days,'' rather than total days in a given month. 
Since this ratio is applied to a calculation formula that accounts for 
all days in the month, the result would be an overstated home market 
imputed credit expense.
    Therefore, we have continued to use the monthly short-term interest 
rates provided by Ferbasa in its original questionnaire response, as 
published in the Dinheiro Vivo.
    Comment 16: According to Ferbasa, the Department incorrectly 
recalculated Ferbasa's U.S. credit expense by using a home market 
interest rate. In addition, Ferbasa alleges that the Department 
incorrectly reclassified as ``bank fees'' its actual U.S. credit 
expense and adjusted NV for this amount. To correct these errors, 
Ferbasa contends that the Department should adjust NV only for the 
amount of its actual U.S. credit expenses which Ferbasa calculated 
based on (1) total U.S. sales prices, (2) its rate of U.S. dollar 
denominated short-term borrowings, and (3) the period of time between 
date of shipment and date of receipt of payment by the U.S. customer. 
Ferbasa argues that use of its reported actual short-term U.S. credit 
expense would be consistent with longstanding Department practice.
    Department's Position: We agree with Ferbasa on both points. First, 
we erroneously misclassified Ferbasa's reported U.S. credit expenses as 
bank fees and thus double-counted U.S. credit expenses in our 
calculation of NV. We have corrected this for these final results. 
Second, we also agree that we incorrectly recalculated Ferbasa's U.S. 
credit expenses by using a home market interest rate for borrowings in 
Reais.
    As the Department stated in the Final Determination of Sales at 
Less than Fair Value: Fresh Cut Roses from Colombia, 60 FR 6980, 6998 
(February 6, 1995), ``in determining the U.S. interest rate, it is the 
Department's policy that the interest rate used for a particular credit 
calculation should match the currency in which the sales are 
denominated.''
    After reviewing the information submitted on the record, we have 
determined that Ferbasa correctly reported its U.S. imputed credit 
expenses in its original submission, by using its actual cost of short-
term borrowing in U.S. dollars during the period. Therefore, for these 
final results, we have used Ferbasa's reported U.S. credit expenses for 
input credit costs incurred for U.S. sales.
    Comment 17: According to Ferbasa, the URAA explicitly amended the 
antidumping law to remove consumption taxes from the home market price 
and eliminate the addition of taxes to U.S. price, in order to ensure 
that no consumption tax is included in the price in either market 
(i.e., to achieve tax neutrality). Specifically, section 773(a)(6)(B) 
of the Act requires the Department to reduce NV by the amount of 
indirect taxes imposed on the foreign product or components thereof 
that have been rebated or not collected, to the extent that such taxes 
are added to or are included in the price of the foreign like product.
    Despite the statutory requirement, Ferbasa argues that for the 
preliminary results of review, the Department failed to deduct from the 
home market selling price the IPI tax included in the home market gross 
unit price. Ferbasa concludes that to correct this error for the final 
results the Department should deduct the amount of the IPI tax 
(reported in the field ITAX) from the gross unit price in its 
calculation of NV.

[[Page 59415]]

    The petitioners argue that the adjustment for taxes referenced by 
Ferbasa is relevant only in price-to-price comparisons. In so far as 
Department practice will require significant changes in the margin 
calculations which will result in a price to CV comparison, the 
petitioners contend that the issue is moot and need not be considered 
by the Department.
    Department's Position: We agree with petitioners that as a result 
of corrections and changes to our calculation of COP, our margin 
calculations have been based on a price to CV comparison. Therefore, 
the issue of deducting IPI taxes from home market prices need not be 
addressed in this notice.
    Comment 18: Ferbasa argues that the Department, in its calculation 
of NV, failed to offset the U.S. commissions by an amount of home 
market indirect selling expenses and inventory carrying costs even 
though no commissions were paid for home market sales of ferrosilicon, 
but a commission was paid for the U.S. sale. Citing Sec. 353.56(c) of 
the Department's regulations, Ferbasa contends that where a commission 
is paid in one market and not in the other market, the commission 
should be offset by the sum of the indirect selling expenses and 
inventory carrying costs incurred in the other market up to the lesser 
of the commission or the selling expenses/inventory carrying costs. 
Finally, Ferbasa argues that the Department should correct this 
oversight for the final results of review by applying its indirect 
selling expense ratio against gross unit prices less the IPI tax.
    Petitioners argue that Ferbasa's contentions regarding the 
commission offset are incorrect. Petitioners suggest that since Ferbasa 
stated that its reported indirect selling expenses reconcile to its 
financial statements and its financial accounting system does not 
reflect any taxes, home market indirect selling expenses should be 
calculated using gross unit price reduce by all taxes.
    Department's Position: We agree with Ferbasa that in the 
preliminary results margin calculations the Department inadvertently 
did not make an offsetting adjustment to NV for the commission incurred 
on the U.S. sale of ferrosilicon. We have corrected this oversight for 
these final results of review. However, we also agree with petitioners 
that it appears that Ferbasa calculated its indirect selling expense 
and inventory carrying cost ratios against a sales value that was 
exclusive of both IPI and ICMS taxes. Therefore, we have calculated 
this adjustment by applying the combined indirect selling and inventory 
carrying cost ratios to home market prices that are net of both of 
these taxes.

Final Results of Review

    As a result of our analysis of the comments received, we determined 
that the following margins exist for the period August 16, 1993 through 
February 28, 1995:

------------------------------------------------------------------------
                                                                 Margin 
                Manufacturer/producer/exporter                 (percent)
------------------------------------------------------------------------
Companhia de Ferro Ligas da Bahia............................     00.05 
------------------------------------------------------------------------

    The Department shall determine, and the U.S. Customs Service shall 
assess, antidumping duties on all appropriate entries. Individual 
differences between U.S. price and NV may vary from the percentages 
stated above. The Department will issue appraisement instructions 
directly to the U.S. Customs Service.
    Furthermore, the following deposit requirement will be effective 
for all shipments of subject merchandise from Brazil entered, or 
withdrawn from warehouse, for consumption on or after the publication 
date of the final results of this administrative review, as provided by 
section 751(a)(1) of the Act: (1) The cash deposit rate for the 
reviewed company will be zero; (2) for merchandise exported by 
manufacturers or exporters not covered in this review but covered in 
previous reviews or the original less-than-fair-value (LTFV) 
investigation, the cash deposit rate will continue to be the rate 
published in the most recent final results or determination for which 
the manufacturer or exporter received a company-specific rate; (3) if 
the exporter is not a firm covered in this review, an earlier review, 
or the LTFV investigation, but the manufacturer is, the cash deposit 
rate will be that established for the manufacturer of the merchandise 
in the final results of this review, earlier review or the LTFV 
investigation, whichever is the most recent; and, (4) the cash deposit 
rate for all other manufacturers or exporters will be 35.95 percent, 
the ``all others'' rate established in the antidumping duty order (59 
FR 11769, March 14, 1994).
    These cash deposit requirements, when imposed, shall remain in 
effect until publication of the final results of the next 
administrative review.
    This notice also 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 the only 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 
return/destruction of APO materials or conversion to judicial 
protective order is hereby requested. Failure to comply with the 
regulations and terms of the APO is a sanctionable violation.
    This administrative review and this notice are in accordance with 
section 751(a)(1) of the Act (19 U.S.C. 1675(a)(1)) and 19 CFR 353.22.

    Dated: November 4, 1996.
Robert S. LaRussa,
Acting Assistant Secretary for Import Administration.
[FR Doc. 96-29936 Filed 11-21-96; 8:45 am]
BILLING CODE 3510-DS-M