[Federal Register Volume 63, Number 28 (Wednesday, February 11, 1998)]
[Notices]
[Pages 6899-6913]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 98-3488]


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DEPARTMENT OF COMMERCE

International Trade Administration
[A-351-806]


Final Results of Antidumping Duty Administrative Review: Silicon 
Metal From Brazil

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

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SUMMARY: On August 8, 1997, the Department of Commerce (``the 
Department'') published the preliminary results of its administrative 
review of the antidumping duty order on silicon metal from Brazil. This 
review covers exports of this merchandise to the United States by four 
manufacturers/exporters, Companhia Brasileria Carbureto de Calcio 
(``CBCC''), Eletrosilex Belo Horizonte (``Eletrosilex''), Companhia 
Ferroligas Minas Gerais-Minasligas (``Minasligas''), and RIMA 
Industrial S/A (RIMA) during the period July 1, 1995, through June 30, 
1996.
    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 comment section of this notice. The 
final results are listed below in the section ``Final Results of 
Review.''

EFFECTIVE DATE: February 11, 1998.

FOR FURTHER INFORMATION CONTACT: Alexander Braier or Cindy Sonmez, AD/
CVD Enforcement Group III, Office Seven, Import Administration, 
International Trade Administration, U.S. Department of Commerce, 14th 
Street and Constitution Avenue, N.W., Washington, D.C. 20230; 
telephone: (202) 482-3818 and (202) 482-0961, respectively.

The Applicable Statue

    Unless otherwise indicated, all citations to the statute are 
references to the provisions effective January 1, 1995, the effective 
date of the amendments made to the Tariff Act of 1930 (the Act), by the 
Uruguay Round Agreements Act (URAA). In addition, unless otherwise 
indicated, all citations to the Department's regulations are to the 
regulations codified at 19 CFR Part 353 (April 1, 1996).

SUPPLEMENTARY INFORMATION:

Background

    On July 31, 1991, the Department published in the Federal Register 
(56 FR 36135) the antidumping duty order on silicon metal from Brazil. 
On August 8, 1997, the Department published in the Federal Register (62 
FR 42760) the preliminary results of review of the antidumping duty 
order on silicon metal from Brazil for the period July 1, 1995, through 
June 30, 1996. On October 6, 1997, we received case briefs from the 
respondents, CBCC, Eletrosilex, Minasligas, and Rima; from two 
interested parties, General Electric Company (``GE'') and Dow Corning 
Corporation (``Dow''); and from petitioners, American Silicon 
Technologies, Globe Metallurgical, and SKW Metals & Alloys, Inc. On 
October 20, 1997, we received rebuttal briefs from the respondents and 
petitioners. At the request of both petitioners and respondents, we 
held a hearing on October 29, 1997. The Department has now completed 
this administrative review in accordance with section 751(a) of the 
Act.

Scope of Review

    The merchandise covered by this review is silicon metal from Brazil 
containing at least 96.00 percent but less than 99.99 percent silicon 
by weight. Also covered by this review is silicon metal from Brazil 
containing between 89.00 and 96.00 percent silicon by weight but which 
contains more aluminum than the silicon metal containing at least 96.00 
percent but less than 99.99 percent silicon by weight. Silicon metal is 
currently provided for under subheadings 2804.69.10 and 2804.69.50 of 
the Harmonized Tariff Schedule (HTS) as a chemical product, but is 
commonly referred to as a metal. Semiconductor grade silicon (silicon 
metal containing by weight not less than 99.99 percent silicon and 
provided for in subheading 2804.61.00 of the HTS) is not subject to the 
order. HTS item numbers are provided for convenience and for U.S. 
Customs purposes. The written description remains dispositive as to the 
scope of product coverage.

Product Comparison

    In accordance with section 771(16) of the Act, we considered all 
products produced by the respondents, meeting the description in the 
``Scope of the Review'' section, above, and sold in the home market 
during the period of review (POR), to be foreign like products for 
purposes of determining appropriate product comparisons to U.S. sales. 
Where there were no sales of identical merchandise in the home market 
to compare to U.S. sales, we compared U.S. sales to the next most 
similar foreign like product based on the grade of silicon metal.

[[Page 6900]]

    On January 8, 1998, the Court of Appeals of the Federal Circuit 
issued a decision in Cemex v. United States, 1998 WL 3626 (Fed. Cir.). 
In that case, based on the pre-URAA version of the Tariff Act of 1930 
(the Act), the Court discussed the appropriateness of using constructed 
value (CV) as the basis for foreign market value when the Department 
finds home market sales to be outside the ordinary course of trade. 
This issue was not raised by any party in this proceeding. However, the 
Uruguay Round Agreements Act (URAA) amended the definition of sales 
outside the ``ordinary course of trade'' to include sales below cost. 
See Section 771(15) of the Act. Because the Court's decision was issued 
so close to the deadline for completing this administrative review, we 
have not had sufficient time to evaluate and apply (if appropriate and 
if there are adequate facts on the record) the decision to the facts of 
this ``post-URAA'' case. For these reasons, we have determined to 
continue to apply our policy regarding the use of CV when we have 
disregarded below-cost sales from the calculation of normal value.

Verification

    As provided in section 782(i) of the Act, on March 17 through March 
22, 1997, we verified information provided by Rima and Minasligas by 
using standard verification procedures, the examination of relevant 
sales and financial records, and original documentation containing 
relevant information. The results of those verifications are outlined 
in the verification reports, the public versions of which are available 
on file in room B-099 of the main Commerce building.

I. Comments Related to Normal Value

Comment 1: Home Market Commissions

    CBCC argues that the Department incorrectly assumed that the home 
market commissions CBCC reported in a particular month were reported on 
a per-ton basis when the commission figures were in fact total 
commission amounts. As a result, CBCC asserts, the Department should 
calculate a per-ton commission amount for that month by dividing the 
reported total commission amounts by the total reported quantity sold. 
The petitioners did not comment on this issue.
    Department's Position: We agree with CBCC. Therefore, for these 
final results we have converted the total commission figures CBCC 
reported in a particular month to per-ton amounts by dividing the 
reported total commission amount for each transaction by the reported 
transaction-specific total quantity sold in that month.

Comment 2: Imputed Credit Calculation

    Petitioners state that the Department failed to use adverse facts 
available for Rima's U.S. imputed credit revenue, as was the 
Department's intention. They state that the highest advanced exchange 
contracts (ACC) interest rate used by any respondent during the POR, 
which the Department used for the imputed credit facts available 
interest rate, is adverse to Rima for situations in which Rima incurred 
credit expenses, but is advantageous to Rima with respect to advance 
payment sales, in which the company realized imputed credit revenue. 
Petitioners state that for these sales, the Department should use as 
adverse facts available the lowest available U.S. dollar interest rate 
on the record of this review. Respondents disagree with petitioners. 
They state that in the preliminary results, the Department decided to 
penalize Rima for not reporting information regarding its credit 
expenses. Respondents conclude that the Department did not intend to 
also penalize Rima for not reporting information regarding its credit 
revenue.
    Department's Position: We agree with petitioners. The Department 
intended to use adverse facts available for the interest rate used in 
Rima's U.S. imputed credit calculation because the company did not 
provide the interest rate for U.S. dollar-denominated borrowing it made 
during the POR, despite the fact it had such borrowing, and despite 
repeated requests for these rates. In the preliminary results analysis 
memorandum (see Analysis of Data Submitted by RIMA Industrial S/A 
(Rima) in the Fifth Administrative Review (95-96) of the Antidumping 
Duty Order on Silicon Metal from Brazil by Alexander Braier, July 31, 
1997), the Department stated that ``Rima failed to provide the ACC 
interest rates it was charged during the POR, despite three 
Departmental requests for these rates. Therefore, pursuant to 776(b) of 
the Act, for Rima's imputed credit calculation, we used as adverse 
facts available for Rima's interest rate, the interest rate which was 
the highest of the ACC interest rates used during the POR by the other 
respondents in this review.'' The imputed credit calculation is used to 
calculate both imputed credit expense and credit revenue. Because Rima 
did not provide the information the Department needed to properly 
calculate imputed credit, the Department intended to use adverse facts 
available on interest rate used for both credit expense and credit 
revenue. However, as petitioners correctly point out, the interest rate 
used was not adverse in our calculation of imputed credit revenue, and 
thus we effectively only used adverse facts available for imputed 
credit expense. For these final results, we have corrected this mistake 
by using the lowest available U.S. dollar denominated interest rate 
submitted by respondents in this review for all of Rima's U.S. sales 
with imputed credit revenue.

Comment 3: Net Weight vs. Gross Weight

    Petitioners argue that for Eletrosilex, the Department erred in the 
calculation of U.S. selling prices by calculating the unit price based 
on the net weight of contained silicon rather than the gross weight of 
the silicon metal. They argue that in a constructed value (CV) based 
margin calculation the Department should use the gross weight of the 
silicon metal to calculate the per-unit U.S. price because CV is 
reported on a gross-weight basis. Use of the contained-weight 
quantities would, they allege, distort the comparison of export price 
(EP) and CV. The respondents did not comment on this issue.
    Department's Position: We disagree with petitioners. Our analysis 
has not changed since our final determination in the previous review, 
when petitioners raised the identical issue. See Notice of Final 
Results of Antidumping Duty Administrative Review and Determination Not 
to Revoke in Part Silicon Metal from Brazil;, 62 FR 1970 (January 14, 
1997) (Final Results of 4th Review). As in the previous review, there 
is no evidence on the record to support petitioners' contention that 
the weights Eletrosilex reported for their U.S. market sales differ 
from the weights used as the basis of the CV calculations and reflect 
only the weight of the silicon, rather than the weight of the silicon 
metal. Therefore, there is no reason to change the per-unit 
calculations from those in the preliminary results of review.

II. Comments Related to COP/CV

Comment 4: Understatement of Depreciation Expense

    Petitioners argue that Rima reduced its asset values for the POR 
and understated its current depreciation expense through the use of a 
hypothetical prior-period accelerated depreciation. Petitioners note 
that Rima admits that its financial statement fixed asset values and 
the asset values that it used to calculate its reported depreciation in 
the worksheets prepared for this review are different. Petitioners

[[Page 6901]]

also note that Rima admits that depreciation was not recognized in 
fiscal years 1987 through 1995. Petitioners assert that Rima failed to 
record virtually any depreciation in its books or financial statements 
during the period from 1987 through 1995, and that as a result, Rima's 
books showed a large depreciable asset balance during the POR. 
Petitioners argue that the Department must not allow Rima to 
retroactively calculate hypothetical depreciation for the years during 
which it recorded no depreciation.
    Petitioners further argue that by using an accelerated depreciation 
methodology (i.e., a five-year useful life for machinery and equipment 
and a ten-year useful life for installations), Rima shifted all of the 
depreciation on the great majority of its assets to years prior to the 
POR. Petitioners argue that by shifting this expense to prior years, 
Rima rendered a large portion of its assets fully depreciated prior to 
the POR, thereby artificially reducing its depreciable asset base and 
corresponding POR depreciation expense.
    Finally, petitioners argue that the method used by the Department 
to adjust Rima's depreciation expense in the preliminary determination 
of this segment of the proceeding is an acceptable facts available 
approach to correcting Rima's understated depreciation in view of 
Rima's failure to report the amount of depreciation it actually 
incurred. Petitioners, however, argue that the proper method of 
correcting this shift to prior years is to disregard the hypothetical 
depreciation calculation and calculate the proper annual amount of 
depreciation using the normal 20 year useful life for machinery and 
equipment and installations under Brazilian GAAP. Petitioners argue 
that the actual life of a silicon metal furnace is at least 20 years 
and often significantly longer. Petitioners argue that it is the 
Department's established practice to reject accelerated depreciation of 
assets where such depreciation fails to allocate costs of the asset 
over the life of the asset, citing Final Determination of Sales at 
LTFV; Dynamic Random Access Memory Semiconductors of One Megabit and 
Above From the Republic of Korea, 56 FR 15467, 15479 (March 23, 1993) 
(``DRAMs from Korea'') and Final Determination of Sales at Less Than 
Fair Value: Fresh and Chilled Atlantic Salmon from Norway, 56 FR 7661 
(Feb. 25, 1991) (``Salmon from Norway''). Petitioners argue that in 
other proceedings regarding this company, the Department also has 
rejected the reporting of lower depreciation during a review period 
based on prior period accelerated depreciation. Petitioners argue that 
in Final Determination of Sales at Less Than Fair Value: Ferrosilicon 
From Brazil, 59 FR 732, 738 (January 6, 1994) (``LTFV Ferrosilicon from 
Brazil''), the Department instructed CBCC to recalculate its 
depreciation and instructed it not to use accelerated depreciation.
    Petitioners argue that in the preceding (1994-95) review in this 
proceeding, the Department rejected Rima's argument that the Department 
should take into account hypothetical, prior years depreciation, not 
recognized in Rima's accounting records and financial statements. 
Petitioners argue that in that review, the Department rejected Rima's 
argument that the estimated depreciation based on the financial 
statement fixed asset values were overstated because Rima's auditors 
did not consider whether Rima's assets had been fully depreciated. 
Petitioners argue that the Department is presented with essentially the 
same situation in this review.
    Rima and GE argue the Department assumed wrongly that Rima did not 
account for certain assets in its depreciation calculation. Rima and GE 
argue that, in the Department's attempt to reconcile the asset values 
on the depreciation schedules to the financial statements, the 
Department was using data representing different asset values. Rima and 
GE argue that the total asset value that the Department thought it was 
calculating represents merely the unindexed value of assets that became 
fully depreciated during 1995, plus the value of the remaining assets 
to be depreciated during 1995. Rima and GE argue that the asset values 
on the worksheets reconcile to the financial statements if the value of 
the assets which have been fully depreciated since 1987 are indexed for 
inflation and then are added to the opening value of the remaining 
assets to be depreciated.
    Rima and GE argue that its depreciation worksheets technically 
overstate depreciation expense, since it assumed that all assets 
purchased prior to 1986 were purchased in 1986, and that many of these 
assets would have become fully depreciated earlier than shown in the 
schedule. Rima and GE argue that the Department noted in its 
verification report that the depreciation schedules no longer directly 
tie to the financial statements when the assets began becoming fully 
depreciated.
    Rima and GE argue that the Department was correct in agreeing that 
a five-year depreciation period employed by Rima is appropriate and in 
accordance with both Brazilian and U.S. GAAP. Rima points out 
petitioners' only support for their argument that a five-year useful 
life is not acceptable under Brazilian GAAP are assertions supplied by 
Eletrosilex and CBCC and do not constitute GAAP. Moreover, Rima argues 
that as the Department noted in its verification report, Rima's 
independent auditor indicated that Rima's new methodology for 
calculating depreciation is fully consistent with Brazilian GAAP, and 
accurately reflects actual depreciation costs. Rima argues that 
Brazilian laws and regulations establish ten years as the normal useful 
life for machinery and equipment used during a standard eight-hour 
shift, but also allow for shorter useful lives if the assets are used 
during three eight-hour shifts in 24-hours as they are at Rima.
    Rima argues that in DRAMs from Korea, the Department rejected the 
depreciation methodology employed by the respondent, not because that 
methodology utilized too short a depreciation period, but rather 
because the respondent switched from a double declining to a straight 
line depreciation methodology without appropriately adjusting the net 
asset values being depreciated. Rima argues that petitioners' reliance 
on Salmon from Norway is also unfounded. Rima argues that in Salmon 
from Norway, the Department relied upon ordinary depreciation expense 
reported in the respondent's financial statements instead of the 
accelerated depreciation amounts used for tax purposes and reported as 
a separate non-operating expense on the company's financial statements. 
Finally, Rima argues that the Department has accepted accelerated 
depreciation expense. Rima argues that in the Final Results of the 
Antidumping Duty Administrative Review of Ferrosilicon from Brazil for 
1995-1996, 62 FR 43504, 43510 (August 14, 1997) (Ferrosilicon from 
Brazil), the Department disagreed with petitioners that Minasligas' 
depreciation calculation was unacceptable because it is based on 
accelerated depreciation and found it consistent with Brazilian GAAP 
and that it did not distort actual costs.
    Department's Position: We agree with Rima, in part. In the 
preliminary results, we incorrectly found that the total fixed assets 
on Rima's depreciation schedules did not reconcile to the financial 
statements. Rima demonstrated that the monetarily corrected costs of 
its assets contained in the depreciation worksheets reconciled to its 
financial statements. Rima also demonstrated the worksheets calculated 
depreciation on the monetarily corrected costs using a straight line 
method over Rima's useful life of the assets. Additionally, Rima

[[Page 6902]]

demonstrated that the depreciation expense shown on the worksheets 
reconciled to the depreciation expense reported in the audit opinion of 
its financial statements. See Memorandum from Theresa L. Caherty to the 
File, dated January 14, 1998.
    We disagree with petitioners that simply because Rima chose not to 
record depreciation and amortization in its accounting records that its 
prior period depreciation and amortization were simply hypothetical 
amounts. In the audit opinion of Rima's financial statements for prior 
years, the auditors declared the amount of unbooked depreciation and 
amortization expenses. In fact, in prior segments of this proceeding 
(i.e., the 1992-1993 and the 1994-1995 administrative reviews) when the 
Department did not resort to total facts available (or total best 
information available), we included in Rima's COP and CV the 
depreciation expense which the auditors stated in Rima's audit opinion. 
Because the amount of depreciation expense stated in the audit opinion 
is supported by Rima's depreciation worksheets, which in turn support 
the depreciation expense included in the submitted COP and CV, Rima's 
reported depreciation expense does not distort the reported COP and CV. 
Our use of Rima's financial statement depreciation expense is 
consistent with Salmon from Norway, where we relied on the depreciation 
expense reported in the financial statements.
    We disagree with petitioners and Rima that useful lives of assets 
in a particular country are dictated by GAAP. GAAP does not simply 
provide tables which indicate what the useful life for a particular 
asset should be; rather, it specifies that the cost of an asset should 
be systematically depreciated over the estimated useful life of the 
asset. The estimated useful life of an asset should be determined by 
consideration of such factors as legal life, the effects of 
obsolescence, and other economic factors. In this case, Rima's audit 
opinion states that the financial statements were presented in 
accordance with GAAP except that Rima did not record depreciation and 
amortization expenses of R$3,264,000. This amount of depreciation and 
amortization was calculated using Rima's estimated useful life of five 
years for machinery and equipment. We agree with Rima that in 1995-1996 
Ferrosilicon, we accepted accelerated depreciation expense based on 
amounts recorded in the financial statements because they were 
calculated in accordance with Brazilian GAAP and they did not distort 
actual costs.
    As explained above, in prior segments of this proceeding, we 
included in Rima's COP and CV depreciation expense that the auditors 
identified in their audit opinion and which was calculated using Rima's 
estimated useful life of five years for machinery and equipment. If we 
were to follow petitioners' request and recalculate Rima's depreciation 
expense using a 20-year useful life for machinery and equipment, we 
would double count depreciation and amortization costs which we 
captured in the prior segments of this proceeding.

Comment 5: Error in Department's Depreciation Adjustment

    Petitioners argue that the Department properly recognized the need 
to make a significant adjustment to Rima's depreciation expense, but in 
making the adjustment it understated the amount. Petitioners argue that 
the Department based its adjustment on the difference between the asset 
value on Rima's financial statement and the December 1996 asset values 
in Rima's hypothetical calculation. Petitioners argue that the 
Department should have used the December 1995 asset values in Rima's 
hypothetical calculation.
    Rima argues that petitioners fundamentally misstate the basis of 
the Department's adjustment. Rima argues that petitioners incorrectly 
suggest that the Department understated the gap between the 1995 asset 
values contained in Rima's depreciation worksheets and the 1995 asset 
values contained in the company's 1996 financial statements by basing 
its adjustment on the difference between Rima's financial statement 
fixed asset values and the beginning 1995 asset values in the 
worksheets. Rima argues that it is apparent from the record evidence 
that the Department in fact grossly overstated the gap between the 1995 
asset values contained in Rima's depreciation worksheets and the 1995 
assets values contained in the company's 1996 financial statement.
    Rima argues that petitioners' claim that the Department employed a 
beginning-of-period amount instead of an end of period amount is off-
base and misleading. Rima argues that the Department needed to employ 
neither a beginning nor ending period, but rather an amount which took 
account of the entire acquisition cost of each asset. Rima argues that 
petitioners' claim is falsely based upon a supposition that Rima had 
been depreciating its assets each year and reporting the un-depreciated 
amount at the end of each year in its financial statements.
    Department's Position: We agree with Rima. As we explained in 
Comment 2 above, in the preliminary results we incorrectly found that 
the total fixed assets on Rima's depreciation schedules did not 
reconcile to the financial statements. Rima demonstrated that the 
monetarily corrected costs of its assets contained in the depreciation 
worksheets reconciled to its financial statements. Rima also 
demonstrated the worksheets calculated depreciation on the monetarily 
corrected costs using a straight line method over Rima's useful life of 
the assets. Additionally, Rima demonstrated that the depreciation 
expense shown on the worksheets reconciled to the depreciation expense 
reported in the audit opinion of its financial statements. See 
Memorandum from Theresa L. Caherty to the File, dated January 14, 1998. 
Therefore, there are no assets on the financial statements for which 
RIMA did not report depreciation expense.

Comment 6: Monetary Variation in Financial Expenses

    Petitioners state that the Department erred in the calculation of 
Rima's financial expenses by not including the category of ``monetary 
variations of liabilities'', which is listed on Rima's income 
statement, in the calculation of interest expense. Petitioners assert 
that ``monetary variation'' should be included in ``net financial'' 
expenses because this category represents the portion of interest 
expense paid to the lender to compensate it for inflation, and as such 
constitutes part of Rima's financial expenses. Citing to Notice of 
Final Results of Antidumping Duty Administrative Review: Gray Portland 
Cement and Clinker From Mexico:, 58 FR 47,256 (September 8, 1993) 
(Cement From Mexico), petitioners assert that it is the Department's 
practice to include monetary variation of liabilities in the 
calculation of financial expenses in non-hyperinflationary economy 
cases such as this one. Petitioners also cite to Notice of Final 
Redetermination of Remand in Ferrosilicon from Brazil, (January 16, 
1996) (Remand in Ferrosilicon from Brazil), stating that in the 
original investigation, monetary variation was included in the 
financial expense line item on Minasligas' financial statements. (See 
petitioners' Case Brief at 39).
    Respondents state that petitioners are incorrect, and that the 
``monetary variation'' category on Rima's income statement does not 
contain any financial expenses incurred by the company during the POR 
and so should be ignored by the Department for the purpose of 
calculating Rima's COP and CV amounts. Rima states that the ``monetary 
variation'' category relates

[[Page 6903]]

exclusively to changes in the face values of the company's outstanding 
monetary liabilities, and so does not include any portion of Rima's 
interest expense. Rather, it isolates what is used to calculate the 
total amount in the ``net financial'' account. As such, it represents 
the amount by which the face value of Rima's loans increase from year-
to-year as a result of inflation and is not, in and of itself, an 
interest expense incurred by the company.
    Rima responds to petitioners' claim regarding Remand in 
Ferrosilicon from Brazil, stating that, while it is true that 
``monetary variation'' was included in the ``net financial'' expense 
line item, the Department did not find that the ``monetary variation'' 
included interest expense. Rather, the Department found that the 
interest expense account on the financial statement included two 
components of interest expense, including a component to compensate the 
lender for a loss of purchasing power. Rima asserts that similarly, the 
``net financial'' expense on Rima's financial statement includes both a 
real interest component and an inflation component to compensate the 
lender for the continuing loss of purchasing power due to inflation.
    Rima cited a Brazilian accounting manual which contained an 
explanation of provision 26.3.2(a) of Brazilian GAAP (Rima notes that 
petitioners cited to this manual in their submission of July 23, 1997, 
attesting to this manual's standing as an authoritative guide). This 
explanation states in part ``. . . only interests are included as 
financial expenses (or revenue), but not the monetary correction or 
exchange variation of the loans which are recorded separately under 
Monetary Correction.'' (See Respondent's Case Brief at 23 and 
Attachment C.) Rima concludes that this provides evidence that the 
``monetary variation'' category on its income statements does not 
contain any interest expense, but rather represents the amount by which 
the principal was increased to adjust for inflation. Finally, Rima 
states that petitioners' cite to Mexican Cement is not appropriate, 
because that case did not involve the indexing of loan principal, and 
did not involve the use of current costs of production.
    Department's Position: We agree with respondents, in part. 
Brazilian GAAP requires that the restatement of liabilities be shown in 
the category ``monetary variation'' on a company's income statement 
(see World Accounting, Vol. 1, Matthew Bender, 1997, pp. BRA-7). The 
restatement of the liability in the company's financial statement 
represents the increase in the principal amount of the loan due to the 
application of the inflation index. It does not represent the interest 
on the restatement, as claimed by petitioners. Furthermore, Rima's 
trial balance for December, 1995 (Exhibit C-3 of the Department's 
verification report), contains the selected account detail for Rima's 
income statement. From this detail, we were able to identify the trial 
balance accounts for ``monetary variation in liabilities'' for each 
Rima company, and tie the total to Rima's income statement. We also 
identified the historic value of liabilities and the interest on the 
monetary variation of liabilities accounts in the ``net financial'' 
account detail.
    However, we noted that the ``monetary variation'' accounts on 
Rima's trial balance contain a sub-account called ``foreign exchange 
gains/losses'' (i.e., gains and losses realized due to currency 
exchange) for each company. These sub-accounts represent financial 
expenses. Therefore, because these sub-accounts represent interest 
expense, the Department has subtracted the total amounts of these sub-
accounts from the ``monetary variation'' category on Rima's income 
statement and has added them to ``net financial'' expenses category. 
The Department's position is that, after making the correction noted in 
the preceding sentence, Rima's income statement line item ``monetary 
variation in liabilities'' contains no interest expense, and 
consequently should not be added to Rima's financial expenses.

Comment 7: Double Counting of Monetary Correction and Deferred 
Financial Expense Amortization

    Petitioners argue that the Department properly rejected Rima's 
reported amortization of deferred financial expenses because Rima did 
not recognize amortization of deferred expenses from the 1987-95 period 
in its accounting records or financial statements. Petitioners argue 
that Rima's reported amortization of deferred expenses is infected with 
virtually all of the same defects as its reported depreciation. 
Petitioners note that Rima did not recognize amortization of deferred 
expenses from 1987-1995 in its accounting records or financial 
statements. Petitioners argue that Rima's attempts to shift 
amortization to prior years by calculating a hypothetical amortization 
during the years 1987-95.
    Petitioners also argue that Rima's hypothetical amortization 
furthers distorts the current amortization by relying on a highly 
accelerated rate. Furthermore, petitioners argue that the highly 
accelerated rate is improper because the deferred assets relate to 
expenses that benefit Rima's production over a much longer period than 
five years.
    Petitioners argue that Rima is wrong that the Department assigned 
the full value of the Rima group amortization to the subject 
merchandise. Petitioners argue that by including the amortization in 
Rima's company-wide financial and G&A expense ratios and applying those 
ratios to COM, the Department allocated a proportionate share of the 
amortization to the subject merchandise.
    Rima and GE argue that the Department incorrectly assumed that the 
monetary correction of certain deferred financial expenses were not 
accounted for in 1995. Rima argues that these deferred financial 
expenses are indexed each year to account for inflation and are then 
amortized. Rima argues that it included in the reported costs both the 
monetary correction on the deferred financial expenses and the 
associated accumulated amortization.
    Rima also argues that the correct current period amortization 
expense was included in the reported costs. Rima argues that the 
submissions and verification exhibits on the record in this proceeding 
document that it properly calculated and reported the monetary 
correction and amortization associated with deferred expense. Rima 
argues that accordingly, the Department's adjustments to interest 
expenses to apply these deferrals to the current year is incorrect.
    Finally, Rima argues that even if the Department was correct that 
these costs were not accounted for properly, it erroneously applied to 
1995 the total amount of deferred expenses, as if they all related to 
silicon metal. Rima argues that the assets of Varzea da Palma in which 
silicon metal is produced are much smaller than those of Bocaiuva, 
which produces non-subject merchandise.
    Department's Position: We agree with Rima, in part. We agree with 
Rima that we erred by including in the COP and CV the full amount of 
the 1995 monetary correction to restated deferred financial expenses. 
While Rima did not record amortization expense in their books, Rima's 
qualified audit opinion stated the amount of depreciation and 
amortization which it did not include in the financial statements for 
the year. Even though Rima did not record the stated amortization in 
its books, Rima included it in its reported COP and CV.
    As with Rima's depreciation expense, in prior segments of this 
proceeding, when the Department did not resort to total facts available 
(or total best information available), we included in

[[Page 6904]]

Rima's COP and CV the amortization expense which the auditors stated in 
Rima's audit opinion. (See, 1992-1993 Silicon Metal and 1994-1995 
Silicon Metal). Because the amount of amortization expense stated in 
the audit opinion is supported by Rima's worksheets, which in turn 
support the amortization expense included in the submitted COP and CV, 
Rima's reported amortization expense does not distort the reported COP 
and CV. If we were to follow petitioners request and recalculate Rima's 
amortization expense using a longer useful life for the deferred 
assets, we would double count amortization costs which we captured in 
the prior segments of this proceeding.
    After further analysis, we agree that Rima included in its 
submitted COP and CV amortization expense of the monetarily corrected 
deferred financial expenses. However, we noted that Rima only included 
in the submitted costs amortization for the deferred financial expenses 
which it identified as related to silicon metal production. It is the 
Departments' practice to calculate financial expenses based on the 
results of the entire consolidated entity. Additionally, Rima included 
its amortization of deferred financial expenses in the reported cost of 
manufacturing. For these final results we recalculated Rima's financial 
expenses. We calculated Rima's average financial expense for 1995 and 
1996. We included Rima's average net financial expenses from its 1995 
and 1996 financial statements, amortization of the total deferred 
financial expenses, and the exchange losses recorded on the financial 
statements in the line item monetary variation on liabilities. We 
allocated Rima's total financial expense over its total cost of sales. 
Because we included Rima's amortization of deferred expenses in the 
calculation of financial expenses, we excluded that same amount from 
Rima's cost of manufacturing.

Comment 8: Use of Rima's 95-96 Financial Statements to Calculate 
Financial Expense

    Petitioners argue that the Department correctly calculated Rima's 
financial expense on its 1995 financial statements because Rima offset 
its financial expense with financial income, and it was not clear that 
this financial income was attributable only to short-term interest 
income (the only offset allowed by the Department), and the Department 
found that the record contained the amount of financial income to 
``undo'' the offset for 1995 only. Petitioners argue that Rima's 
assertion that it did not have long-term interest bearing assets is 
false. Petitioners assert that GE's argument also conveniently 
overlooks the fact that the Department specifically found that Rima had 
financial income in 1995, which presumably resulted from investments 
that Rima officials claimed did not exist.
    Rima and GE argue that the Department should calculate Rima's 
financial expense rate utilizing the net financial expenses from both 
Rima's 1995 and 1996 financial statements because the Department found 
that Rima had financial income in 1995.
    Department's Position: We agree with Rima. As discussed in Comment 
7 above, we recalculated Rima's financial expense using its 1995 and 
1996 data. We did this because, upon further examination of Rima's 
interest expense data in Exhibit C-3 and Rima's 1995 and 1996 balance 
sheets, we were able to determine that Rima earned only short-term 
interest income. Therefore, we included Rima's average net financial 
expenses from its 1995 and 1996 financial statements, amortization of 
the total deferred financial expenses, and the exchange losses recorded 
on the financial statements in the line item monetary variation on 
liabilities. We allocated Rima's total financial expense over its total 
cost of sales for 1995 and 1996. Because we included Rima's 
amortization of deferred expenses in the calculation of financial 
expenses, we excluded that same amount from Rima's cost of 
manufacturing.

Comment 9: Double Counting of Deferred Non-Financial Expense 
Amortization

    Petitioners argue that the Department properly rejected Rima's 
reported amortization of deferred non-financial expenses because Rima 
did not recognize amortization of deferred expenses from the 1987-95 
period in its accounting records or financial statements. Petitioners 
argue that Rima's reported amortization of deferred expenses is 
infected with virtually all of the same defects as its reported 
depreciation. Petitioners note that Rima did not recognize amortization 
of deferred expenses from 1987-1995 in its accounting records or 
financial statements.
    Petitioners also argue that Rima's hypothetical amortization 
further distorts the current amortization by relying on a highly 
accelerated rate. Furthermore, petitioners argue that the highly 
accelerated rate is improper because the deferred assets relate to 
expenses that benefit Rima's production over a much longer period than 
five years.
    Rima argues that the Department double counted the amortization 
expense on certain deferred non-financial expenses. Rima argues that it 
included in the reported costs both the monetary correction on the 
deferred non-financial expenses and the associated accumulated 
depreciation account. Rima also argues that the correct current period 
amortization expense was included in the reported costs. Rima argues 
that the submissions and verification exhibits on the record in this 
proceeding document that it properly calculated and reported the 
monetary correction and depreciation expense associated with deferred 
non-financial expenses.
    Department's Position: We agree with Rima. As we explained in 
Comment 5 above, in the preliminary results we incorrectly found that 
Rima did not report amortization expenses for its deferred asset 
accounts. Rima demonstrated that the monetarily corrected deferred 
expenses were included in amortization worksheets and the reported COP 
and CV.

Comment 10: Slag Revenue

    CBCC states that the quantity produced figure it used to calculate 
its reported COP on a per-ton basis excluded the quantity of slag 
generated during production. As a result, CBCC states, its reported COP 
was net of slag. However, CBCC argues, because this by-product is sold 
from time to time, and because it provided a figure for the revenue 
generated from its sales of slag in exhibit 14 of its December 30, 1996 
submission, the revenue generated by such sales should be deducted from 
COP. CBCC asserts that not only is this in accordance with the 
Department's practice, but the Department made the identical adjustment 
for another Brazilian producer in its preliminary results. The 
petitioners did not comment on this issue.
    Department's Position: We agree with CBCC and for these final 
results have made an adjustment to its reported COP to account for the 
revenue generated by its sales of slag. For a detailed description of 
this adjustment please see the Department's final results analysis 
memorandum for CBCC.

Comment 11: Depreciation on Dust Removal System

    Petitioners argue that Minasligas underreported depreciation by not 
reporting depreciation for the dust removal system that is under the 
same sub-account as the new furnace in Minasligas's asset ledger, 
reported in Minasligas's cost-deficiency questionnaire response at 
exhibit 6

[[Page 6905]]

(March 15, 1997). Petitioners contend that the dust removal system 
should have been depreciated together with all other assets related to 
the new furnace and conclude that, for the final results, the 
Department should add the depreciation for this asset to Minasligas' 
reported depreciation and recalculate Minasligas' COP and CV 
accordingly.
    Minasligas argues that depreciation was not understated for the 
dust removal system, since this asset was (a) non-related to the 
production of silicon metal, (b) designed to produce micro silica--a 
by-product of silicon metal with a separate cost center, and (c) non-
operative during the POR. Minasligas concludes that even if the dust 
removal system had been in operation during the POR, the depreciation 
expense would be entirely allocated to micro silica and not to silicon 
metal in Minasligas' financial accounting system.
    Department's Position: We agree with petitioners. With respect to 
Minasligas' claim on the operational status of the dust removal system, 
the Department finds no evidence on the record demonstrating that the 
dust removal system was not in simultaneous operation with the new 
furnace during the POR. It is Department's long-standing practice to 
depreciate all assets which have been placed into service and are 
related to the production of subject merchandise. Because the dust 
removal system is attached to the new furnace, which was in operation 
during the POR, and because Minasligas' own books treat the dust 
removal system as part of that new furnace, in these final results of 
the review, the Department has rejected Minasligas' claim and allocated 
the depreciation expense of the value of the dust removal system to 
silicon metal production.

Comment 12: Weight-Averaging COP Data

    Petitioners contend that the Department should use a weighted 
average COM for the POR using Exhibit 5 of Minasligas' March 5, 1997 
cost deficiency response as verified during the company verification. 
Minasligas stated that COP data submitted to the Department in its 
submission of March 5, 1997, was inadvertently calculated by means of 
simple averaging as opposed to weight-averaging, which is the 
Department's standard methodology.
    Department's Position: We agree with petitioners that final margin 
calculations should be based on the weight averaged COP data and we 
corrected this in these final results of the review. For a detailed 
discussion on the performed calculation please see Department's final 
analysis calculation memorandum for Minasligas.

Comment 13: Slag Offset

    Minasligas argues that the offset the Department intended to make 
to COP for Minasligas' sales of slag was not properly calculated. 
Minasligas asserts that, due to a programming error, the slag offset, 
which Minasligas reported as a negative number, was incorrectly added 
rather than subtracted from the Department's calculations. Petitioners 
did not comment on this issue.
    Department's Position: We agree with Minasligas. In these final 
results of review, we have rectified the problem by subtracting the 
absolute value of the slag offset, reported as a negative number, from 
COP in the margin calculations.

Comment 14: Financial Expense Ratio

    Petitioners state that in the preliminary results the Department 
calculated CBCC's financial expenses by multiplying cost of 
manufacturing by a financial expense ratio which the Department derived 
from the consolidated financial statements of Solvay & Cie, CBCC's 
Belgian parent. Petitioners assert that, because the use of this ratio 
significantly understates the financial expenses incurred by CBCC, 
produces distorted results, is contrary to law, and is inconsistent 
with past Departmental practice, for the final results the Department 
should calculate CBCC's financial expenses using a ratio derived from 
CBCC's own financial statements.
    Petitioners contend that, while the Department normally bases the 
financial expense ratio on a parent company's consolidated financial 
expenses because the group's parent, due to its influential ownership, 
has the power to determine the capital structure of each member within 
the group, in accordance with section 773(f) of the Act, the Department 
must also ensure that the costs it calculates reasonably reflect the 
costs associated with the production and sale of the subject 
merchandise. In this case, petitioners argue, when comparing the 1995 
financial statements of CBCC and Solvay & Cie, it is clear that the 
Department's use of Solvay & Cie's financial expense ratio results in a 
large understatement of the financial expenses actually incurred by 
CBCC in the production and sale of subject merchandise and could result 
in the shifting of debt from the parent to the subsidiary for the 
purpose of reducing the financial expense ratio.
    Furthermore, petitioners assert that not only did CBCC account for 
less than 2 percent of Solvay & Cie's consolidated net worth in 1995, 
but because the group consists of numerous subsidiaries and affiliated 
parent companies in the automotive, chemical, pharmaceutical, plastic, 
shipping, and related industries, virtually all of Solvay & Cie's 
financial expenses and cost of goods sold (COGS), as reflected on its 
1995 consolidated financial statements, were incurred by entities other 
than CBCC engaged in businesses completely unrelated to the production 
and sale of silicon metal.
    Petitioners also contend that in Notice of Final Results of 
Antidumping Duty Administrative Review: Silicon Metal from Brazil, 59 
FR 42806 (August 19, 1994) (Final Results of 1st Review) and the Notice 
of Final Determination of Sales at Less than Fair Value Ferrosilicon 
from Brazil, 59 FR 732 (August 6, 1994), the Department did not rely on 
Solvay & Cie's financial expense ratio to calculate CBCC's financial 
expenses, but rather based the ratio on Solvay do Brazil's, CBCC's 
direct parent, consolidated financial statements.
    Petitioners further argue that, if the Department agrees with their 
position and bases its calculation of CBCC's financial expense on 
CBCC's financial statements, the Department should use the total 
financial expense figure as shown on CBCC's financial statement and not 
allow CBCC's claimed offset for interest income because CBCC failed to 
demonstrate that this interest income was derived from short-term 
investments of working capital. Finally, petitioners assert that, if 
the Department were to reject their position and continue to calculate 
CBCC's financial expense using the ratio derived from Solvay & Cie's 
financial statements, the Department should still not allow an offset 
for interest income because there is no information on the record 
demonstrating that the interest income offsetting Solvay & Cie's total 
financial expenses was earned on short-term investments of working 
capital.
    CBCC argues that, in accordance with the Department's established 
practice as applied in Final Results of 4th Review, Notice of Final 
Results of Antidumping Duty Administrative Review and Determination Not 
to Revoke in Part Silicon Metal from Brazil, 62 FR 1594 (January 14, 
1997) and Notice of Final Results of Antidumping Duty Administrative 
Review: Ferrosilicon from Brazil, 62 FR 43504 (August 14, 1997) 
(Ferrosilicon from Brazil), the Department should not alter its 
preliminary results determination and should continue to rely on the 
consolidated Solvay & Cie financial statements to calculate CBCC's 
interest expenses. However, CBCC states, while

[[Page 6906]]

the Department has used an accurate methodology to calculate its 
financial expenses, it nevertheless relied on an incorrect ratio when 
it should have used the ratio CBCC provided in exhibit D-3 of its 
November 4, 1996, submission.
    Department's Position: We agree with the respondent that our 
established policy is to calculate interest expenses incurred on behalf 
of the consolidated group of companies to which the respondent belongs, 
based on consolidated financial statements, regardless of whether the 
respondent's financial expense is higher than that of the controlling 
entity. This practice recognizes two facts: (1) The fungible nature of 
invested capital resources such as debt and equity of the controlling 
entity within a consolidated group of companies, and (2) the 
controlling entity within a consolidated group has the power to 
determine the capital structure of each member country within its group 
(see, e.g., Notice of Final Results of Antidumping Duty Administrative 
Review Aramid Fiber Formed of Poly ParaPhneylene Terephthalamide from 
the Netherlands, 62 FR 136 (July 16, 1997)). While the petitioners 
correctly contend that in a past review of this case and in the LTFV 
determination for ferrosilicon from Brazil we relied on Solvay do 
Brazil's financial statements, they overlook the fact that we did not 
have the Solvay & Cie consolidated financial statement on the record 
for these reviews. Because we clearly have Solvay & Cie's consolidated 
financial statement on the record for this review, in accordance with 
our established practice, we have used this consolidated financial 
statement to calculate CBCC's interest expenses.
    With respect to petitioners' contention that we should not permit 
an offset to CBCC's interest expense for interest income, we agree. Not 
only did CBCC fail to make an offset claim, but CBCC provided no 
information on the record demonstrating that any of the financial 
income reflected on the Solvay & Cie consolidated income statement was 
earned on short-term investments of working capital. Therefore, for 
these final results we have not made an interest income offset to 
CBCC's financial expenses.

Comment 15: Production Quantity

    Eletrosilex and Dow Corning state that the Department should make 
an adjustment in its calculation of COM to reflect an extraordinary 
event which caused Eletrosilex's furnaces to shut down for substantial 
periods of time during two months of the POR, resulting in what they 
claim to be a highly distorted COM. Eletrosilex requests that in the 
COM calculation, the Department replace the actual production during 
March and May 1996, which was unusually low, with the average 
production quantity during the other 10 months of the POR. The company 
contends that two unrelated events resulted in the lack of supply of 
electrodes, an essential ingredient in the production of silicon metal, 
which led to unusually low production during these two months. The 
first event was a dispute with Eletrosilex's long-term supplier of 
electrodes, and the ultimate termination of the supply relationship. 
The second event was a work stoppage by Brazil's customs workers, which 
hampered Eletrosilex's ability to import new shipments of electrodes. 
Eletrosilex contends that during the prolonged periods during which it 
could not produce silicon metal, most of the costs of production, such 
as direct labor, direct materials, purchase of most materials, 
equipment costs, maintenance costs, selling expenses, general and 
administrative expenses and financial expenses, remained constant. 
Therefore, according to Eletrosilex, the reported cost of manufacturing 
is distorted, warranting an adjustment by the Department. In addition, 
Dow Corning supports Eletrosilex's claim for an adjustment by stating 
that their supply of silicon metal from Eletrosilex was interrupted due 
to a low production during those months of the POR.
    Petitioners assert that the Department should not make this 
adjustment because COM was calculated correctly, based on the actual 
costs incurred. Petitioners cite to the Agreement on Implementation of 
Article VI of the GATT, Statement of Administrative Action, Antidumping 
Duty and Procedural Provisions 807, 835, reprinted in 1994, U.S. 
C.C.A.N. 4151, 4172, (``SAA''), which states that costs shall be 
determined ``using a method that reasonably reflects and accurately 
captures all of the actual costs incurred in producing and selling the 
merchandise under . . . review.'', and contend that ``Curtailments in 
production due to a restricted flow of supplies caused by the 
termination of an unreliable supplier are simply a fact of doing 
business. Such occurrences do not render the actual costs incurred 
distortive and do not warrant any adjustment to those costs.'' See 
Petitioners' Rebuttal brief at 14.
    Department's Position: We disagree with Eletrosilex and Dow 
Corning. The Department rejected a similar argument from Eletrosilex in 
the first review. See Notice of Final Results of Antidumping Duty 
Administrative Review: Silicon metal from Brazil, 61 FR 46763 
(September 5, 1996) (Final Results of 3rd Review). As stated in those 
final results, the Department's policy is to use actual production 
volumes in the calculation of COM. The Department's policy is to use 
actual cost and production information because this information is the 
most accurate.

Comment 16: G&A Expenses

    Eletrosilex asserts that the DOC should use the actual G&A incurred 
during the POR rather than the average based on Eletrosilex's 1995 
financial statements. Eletrosilex states that the Department should do 
so because the company provided the Department with the actual G&A for 
each month of the POR, and because Eletrosilex incurred an 
extraordinary charge which is reflected in the 1995 financial 
statements, but actually occurred outside the POR. Eletrosilex claims 
that the Department rejected its normal policy of using fiscal year 
data to calculate G&A expenses in the first administrative review of 
this proceeding, where it concluded that to apply actual G&A expenses 
would produce a distorted and unrepresentative result.
    Petitioners state that the Department was correct in employing its 
standard practice and calculating Eletrosilex's G&A expenses based on 
the company's 1995 financial statements. Petitioners state that 
respondents have provided no documentation to substantiate their claim 
that the amount in question was an extraordinary charge, and that 
calculating G&A in the manner suggested by respondents would be 
contrary to established Department practice.
    Department's Position: We disagree with Eletrosilex. The Department 
correctly used Eletrosilex's most recently audited financial statements 
to calculate Eletrosilex's G&A expenses, because G&A expenses are 
period expenses. Period expense categories such as G&A and interest 
expense capture all expenses incurred during a company's standard 
reporting period, i.e. its fiscal year. The Department's accepted 
practice is to use the audited fiscal year financial statement that 
most closely corresponds to the POR to calculate period expense ratios 
such as the G&A and interest expense ratios. The Department does not 
adjust these period expenses to account for certain expenses which were 
incurred at a particular point in time during a company's fiscal year. 
Employing the methodology used in this instance is both consistent with 
Department policy, and accurately reflects expenses

[[Page 6907]]

realized during the most recent fiscal year for which financial 
statements were available.

III. Comment Related to U.S. Sales

Comment 17: Date of Sale

    Petitioners contend that the Department erred by using the purchase 
order confirmation date rather than the invoice date for determining 
date of sale for Minasligas' U.S. sales. Petitioners argue that 
contrary to the Department's questionnaire instructions issued for this 
review period, Minasligas reported the purchase order confirmation date 
as the date of sale for its U.S. sales rather than the invoice date.
    Minasligas responded that the Department was correct in using the 
purchase order date, as it has in prior reviews, in determining the 
date of sale. Minasligas asserts that purchase order date is the date 
upon which all sales terms are set. Minasligas deems the invoice date 
as an improper date of sale, because a sale may have more than one 
``nota fiscal'' (invoice) issued at different dates depending on the 
date of shipment of each lot from the plant and a separate ``master 
nota fiscal'' at the port.
    Department's Position: We agree with Minasligas. Consistent with 
our practice in the second, third, and fourth reviews, the Department 
used date of confirmation order as date of sale based upon our finding 
that all essential terms of sale are established by this date.

Comment 18: Tying Sales to Entries

    Petitioners assert that section 751(a)(2)(A) of the Act requires 
the Department to determine the margin of dumping on each entry of 
subject merchandise during the POR. Petitioners assert that, in its 
preliminary results the Department incorrectly included within its 
margin calculation sales transactions which were not within the POR, 
and excluded from its margin calculation sales which were indeed 
entered in the POR. As a result, petitioners argue, the Department 
understated the margins of dumping for Minasligas, Eletrosilex and CBCC 
and, if not corrected for the final results, will understate the 
assessment and cash deposit rates for these firms as well. Petitioners 
contend that section 751(2)(B) of the Act requires that antidumping 
duties be imposed in the amount of the margin of dumping in order to 
ensure that the duty offsets the unfairly low pricing of the 
merchandise entering the United States. Therefore, petitioners assert, 
to impose duties on entries at rates based on sales unrelated to the 
POR, as the Department has done its preliminary results, is a violation 
of this core principle of the U.S. antidumping law.
    With respect to Eletrosilex, petitioners argue that certain U.S. 
sales reported by Eletrosilex did not enter the U.S. Customs territory 
during the POR and, based on the arguments presented above, should be 
excluded from the Department's margin calculations for Eletrosilex for 
these final results.
    With respect to CBCC, petitioners assert that the Department must 
determine which sales made by CBCC entered U.S. Customs territory for 
consumption during the POR, including merchandise withdrawn from a 
bonded warehouse, in order to establish a universe of sales to review 
during the POR. In response to petitioners, CBCC stated that it sells 
to unrelated U.S. customers and has no knowledge of the ultimate 
destination of the merchandise once it enters the bonded warehouse in 
the territory of the United States. Further, petitioners contend that 
based on a comparison of the U.S. sales by the U.S. Census Bureau for 
the POR, there was a very large volume of entries for consumption of 
silicon metal from Brazil during July 1995 and there are no 
corresponding sales reported to the Department by the respondents. In 
addition, petitioners assert, the volume of reported arrivals at U.S. 
ports during July 1995 falls far short of the volume of reported 
entries for consumption during that month. For these reasons, 
petitioners argue, as was done in the preceding two segments of this 
proceeding, the Department must request from the U.S. Customs Service 
information concerning which U.S. sales by CBCC entered U.S. Customs 
territory for consumption during the POR, including merchandise 
withdrawn from bonded warehouse for consumption during the POR.
    In its case briefs, Minasligas refers to the questionnaire that the 
Department issued to the respondents in this review on the issue of 
which sales to consider for a review during the POR. It is Minasligas' 
understanding that in EP sale situations, Minasligas was required to 
report each sale transaction to the Department based on its date of 
shipment. Hence, Minasligas contends the Department should include 
those U.S. sales in question that have been shipped during the POR but 
whose dates of sales are indeed outside the POR.
    Department's Position: We disagree with Minasligas. The 
Department's methodology has remained the same as that in prior reviews 
in determining which U.S. sales to review. Further, information on the 
record confirms that all respondents in this review had at least one 
consumption entry into U.S. Customs territory during the POR. 
Therefore, in the final results of this review, the Department has 
continued to employ the following approach in determining which U.S. 
sales to review for all companies:
    (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.
    We also disagree with petitioners. The Department most recently 
addressed and rejected petitioners' assertion that the Department of 
Commerce calculate dumping margins based on sales of subject 
merchandise that entered U.S. Customs territory during the POR in the 
final results of the last review of this order (See Final Results of 
4th Review at 1955, 1956).
    Our analysis of this issue and interpretation of the statute remain 
unchanged from those announced in the final results of the second, 
third and fourth reviews of this order. In applying a consistent 
methodology from review to review, we capture all sales transactions. 
Changing the methodology could result in the failure to review some 
sales.

Comment 19: Shipment Date

    Citing to the Department's Notice of Final Determination of Sales 
at Less Than Fair Value: Welded Stainless Steel Pipe from Malaysia, 59 
FR 4023 (January 28, 1994), petitioners contend that it is the 
Department's practice to calculate U.S. imputed credit expenses for the 
period from the date of shipment from the factory to the date of 
payment from the U.S. customer. However, petitioners argue, based on 
their comparison of the date of shipment reported by CBCC in its U.S. 
sales listing and U.S. sales documentation on the record, it appears 
that CBCC reported as its date of shipment the date of the bill of 
lading (i.e., the date upon which the merchandise was loaded onto the 
ship at the foreign port). Petitioners argue that, because CBCC failed 
to report the actual date of shipment for its U.S. sales, the 
Department should use the date of sale as the date of shipment when 
calculating CBCC's U.S. credit

[[Page 6908]]

expenses. CBCC did not comment on this issue.
    Department's Position: We agree with the petitioners in part. It is 
the Department's long-standing practice to calculate credit for U.S. EP 
sales from the time that the merchandise is shipped to the customer 
from the foreign production site (see, e.g., Notice of Final 
Determination of Sales at Less Than Fair Value: 3.5'' Microdisks and 
Coated Media Thereof From Japan, 54 FR 6433 (February 10, 1989)). Based 
on our review of the record, we have determined that the date of 
shipment reported by CBCC for its U.S. sales was the date of the bill 
of lading and not the date of shipment from the foreign production 
site. As a result, CBCC's reported credit expenses cover only a portion 
of the imputed credit expense period. However, as indicated in CBCC's 
November 4, 1996 section A response, the respondent issues its U.S. 
sales invoices upon shipment of the merchandise from the plant to the 
port. Therefore, for these final results we have relied on CBCC's 
reported invoice dates for our calculation of its U.S. credit expenses.

Comment 20: Deduction of Movement Expenses From EP

    Petitioners assert that the Department did not deduct (1) 
warehousing expenses, and (2) the ICMS tax that Rima incurred for 
inland freight, from EP, as the statute requires. They state that the 
full amount of warehousing expenses, as well as inland freight (field 
``FGNMOVE'') inclusive of ICMS taxes, should be deducted from Rima's 
EP.
    Department's Position: We agree with petitioners. Section 
772(c)(2)(A) of the Act requires that all movement expenses be deducted 
from EP. Warehousing expenses, and ICMS taxes paid on freight, are 
movement expenses. Therefore, we have modified these final results to 
deduct the full amount of inland freight, inclusive of warehousing 
expenses and ICMS taxes, from Rima's EP.
    Furthermore, section 773(a)(6)(B)(ii) requires that all movement 
expenses be deducted from normal value. Therefore, for these final 
results, we also deducted ICMS taxes incurred on freight from normal 
value. We note that we did not deduct warehousing expense from normal 
value because Rima did not incur this expense for home market sales.

Comment 21: U.S. Credit Expenses

    Minasligas argues that the Department double-counted its U.S. 
credit expenses in the preliminary results. Minasligas contends that in 
addition to the adjustment for imputed credit expenses, the Department 
also adjusted Minasligas' credit expenses for Advance Exchange Contract 
(ACCs) bank charges that it reported in its U.S. sales listing. 
Minasligas asserts that the bank charges it reported were not a one-
time fee, but actually the credit expenses charged by the bank for the 
period during which credit was outstanding by the customer. In other 
words, Minasligas argues, these charges are identical to the 
Department's imputed credit expenses because they account for the 
opportunity cost associated with the period during which payment is 
outstanding. Minasligas further asserts that the Department can confirm 
that these bank charges are in fact credit expenses charged by the bank 
in connection with ACCs by analyzing the documentation provided for a 
certain U.S. sales observation in verification exhibit 10. Minasligas 
contends that the documents in this exhibit demonstrate that the 
expense was calculated based on the number of days that have lapsed 
from the date of payment of the ACC to Minasligas until the date on 
which the bank received payment from the customer. Finally, Minasligas 
argues that for the final results, if the Department determines ACCs to 
be related to U.S. sales, the Department, using the ACC bank charges, 
should calculate negative credit expenses for the period between the 
date of payment by the bank and the date of shipment of the merchandise 
from the plant. On the other hand, Minasligas argues, if the Department 
determines that the ACCs are not related to U.S. sales, the Department 
should disregard the ACC's bank charges and calculate imputed credit 
expenses pursuant to the same methodology it applied to Minasligas in 
the Ferrosilicon from Brazil at 43504. The petitioners did not comment 
on this issue.
    Department's Position: We agree with Minasligas in part. The 
Department double-counted credit expenses for Minasligas' U.S. sales. 
Our further analysis of the evidence on the record reveals that bank 
charges, which are in essence interest incurred on export loan funds 
obtained as working capital in the form of advanced exchange contracts 
(ACCs), are not a flat bank fee connected with the issuance of ACCs. 
Consistent with Ferrosilicon from Brazil, the Department will not treat 
bank charges as part of direct selling expenses as these interest 
payments have been captured in Minasligas's interest expense account.
    The Department disagrees with Minasligas regarding its imputed 
credit revenue claim. At verification, the Department determined that 
Minasligas obtained funds used for financing of future export sales 
from a bank without having to present relevant sales documentation at 
the time of payment by bank. Minasligas' claim that the Department 
should have used the date on which the bank forwards funds to 
Minasligas pursuant to an ACC is incorrect because, at verification, 
the Department did not find a direct one-to-one relationship between 
the acquisition of the ACCs and U.S. sales, as consistent with the 
final results of Ferrosilicon from Brazil. Thus, the Department finds 
that the date of payment by bank to Minasligas to be an inappropriate 
date of payment to use for Minasligas' credit expense calculation. For 
the above-discussed reason, in the final results of this review, the 
Department rejected Minasligas' imputed revenue claim and calculated 
its imputed credit expense on the basis of payment outstanding, (i.e., 
number of days between the date of payment by customer to Minasligas 
and the date of shipment from the factory) (see Analysis of Data 
Submitted by Companhia Ferroligas Minas Gerais (Minasligas) in the 
Fifth Administrative Review (95-96) of the Antidumping Duty Order on 
Silicon Metal from Brazil, July 31, 1997). Therefore, the Department 
did not perform any adjustment to the payment date from the preliminary 
results of this order.

Comment 22: Duty Drawback

    Petitioners made two comments regarding duty and tax drawback. 
First, petitioners argue that the Department should not grant a duty 
and tax drawback adjustment to Eletrosilex's EP, as the company did not 
properly establish its entitlement to the adjustment. Second, 
petitioners contend that if the Department does grant the drawback, 
then, consistent with Department practice, the identical adjustment to 
CV must be made in order for there to be an `apples to apples' 
comparison between EP and CV; for sales below cost analysis, the 
Department should add the amount of the duties and taxes on electrodes 
in COP. Eletrosilex provided no comments on this issue.
    Department's Position: We agree with petitioners that no drawback 
adjustment is warranted. The Department must reject Eletrosilex's claim 
for a drawback adjustment for import duties, ICMS taxes, and IPI taxes 
because Eletrosilex failed to demonstrate on the record that it claimed 
and received a duty and tax drawback. Eletrosilex did not demonstrate 
that it paid duties, IPI taxes, and ICMS taxes for imported

[[Page 6909]]

electrodes used for home market sales in response to the Department's 
original questionnaire issued September 3, 1996. Payment of these taxes 
and duties on the importation of inputs used for domestic sales, but 
not for export sales, is necessary to establish a drawback claim. In 
the third supplemental questionnaire response, dated February 14, 1997, 
Eletrosilex responded that they did pay taxes and duties on the 
importation of electrodes used for domestic sales. However, as its 
evidence, Eletrosilex provided import declaration forms that were dated 
after the POR. Further, this evidence relates only to IPI taxes and 
import duties on its importation of electrodes. Thus, Eletrosilex 
failed to substantiate its drawback claim by not providing appropriate 
payment documentation on Customs duties and IPI taxes and no payment 
documentation on ICMS taxes imposed on importation of electrodes used 
for the production of home market sales or any support documentation 
for the POR.

Comment 23: Reporting Expenses In the Currency in Which They Were 
Incurred

    Petitioners argue that Eletrosilex improperly converted inland 
freight, warehousing charges, port charges, and ocean freight into U.S. 
dollars and reported the converted U.S. dollar amounts on the sales 
listing. Petitioners argue that the Department should not use the 
provided U.S. dollar amounts, and instead should use the reais-
denominated amounts which were also provided to the Department.
    Department's Position: We disagree with petitioners. In its 
preliminary margin calculation, the Department used the revised U.S. 
sales listing, which stated reais-denominated amounts for inland 
freight plant/warehouse to port of exit, brokerage and handling and 
port charges. For the final results of this review, the Department has 
continued to use the fields of expenses in the currency in which they 
were incurred.

IV. Comment Related to Taxes

Comment 24: PIS/COFINS Reflected in the Cost of Production

    Petitioners argue that a review of the record in this case 
indicates that CBCC reported its weighted-average direct material costs 
for the POR exclusive of PIS and COFINS taxes. Petitioners assert that, 
not only are these taxes imbedded in the prices CBCC paid for direct 
materials, but in Final Results of 4th Review the Department included 
PIS and COFINS taxes in its calculation of COP and CV. Therefore, 
petitioners claim the Department should do so again for these final 
results. CBCC did not comment on this issue.
    Department's Position: We agree with the petitioners. In order for 
COP to reflect the complete cost of materials, the costs we use in our 
calculation of COP must include the full cost of materials, including 
any hypothetical tax amounts that are presumably imbedded within these 
costs (See Final Results of 4th Review). Thus, in order for 
the COP to reflect the full purchase price of the materials, we must 
add to the reported material costs an amount reflective of the PIS and 
COFINS taxes on material inputs. We have reviewed the information CBCC 
provided on the record and have determined that, while CBCC included 
PIS and COFINS taxes in its calculation of COP in exhibit D-4 of its 
November 4, 1996 questionnaire response, it nevertheless did not 
include the taxes in its reported COP computer files (submitted June 2, 
1997). Therefore, for these final results we have added to the COP 
reported in CBCC's computer file the PIS/COFINS tax amount reported in 
exhibit D-4.

Comment 25: COS Adjustment for PIS/COFINS

    CBCC and Minasligas argue that the Department failed to adjust 
their preliminary margin calculations to account for the PIS/COFINS 
taxes which the respondents pay for home market sales but not for U.S. 
sales. The respondents contend that, in order to avoid distortions in 
its margins calculations, for these final results the Department should 
make a circumstance-of-sale (COS) adjustment for these taxes, as 
directed by 19 USC 1677b(a)(6)(C)(iii), or an adjustment to NV in 
accordance with 19 USC 1677b(a)(6)(B)(iii). Respondents assert that, 
while they are well aware that this issue has been raised in previous 
reviews of this order and in reviews of other orders, the Department's 
recent determinations to not make a COS adjustment for the PIS/COFINS 
taxes are incorrect and the Department should change its position for 
these final results for the following reasons:
    First, citing to Notice of Frozen Concentrated Orange Juice from 
Brazil; Final results and Termination in Part of Antidumping Duty 
Administrative Review, 55 FR 47502 (November 14, 1990), in which the 
Department made a COS adjustment for PIS/COFINS taxes, respondents 
assert that, until recently, it was the Department's long-standing 
policy to make a COS adjustment for these taxes and argue that there is 
no valid reason for the Department to depart from this established 
practice.
    Second, respondents contend that in the most recent final results 
notice in which this issue was raised, Ferrosilicon from Brazil, the 
Department's determination not to make a COS adjustment was based on 
incorrect assumptions. Respondents assert that in Ferrosilicon from 
Brazil the Department concluded that the PIS and COFINS taxes were not 
imposed on the sale of subject merchandise. However, respondents 
contend, as the record in this review demonstrates, the Brazilian PIS 
and COFINS taxes are imposed on revenue from sales of products produced 
and sold in the domestic market, exclusive of export revenue. As a 
result, respondents claim, like value-added taxes, PIS and COFINS are 
only imposed if a sale is made and are therefore tied directly to 
silicon metal sales transactions. Respondents argue that the only 
difference between PIS/COFINS and the other Brazilian taxes is that 
PIS/COFINS taxes, unlike the IPI and ICMS taxes, are not usually 
reported on the commercial invoice. However, respondents assert, the 
fact that PIS and COFINS taxes are imposed on gross receipts of sales 
does not mean that they are not imposed on sales transactions. For 
example, respondents argue, as noted by the United States Court of 
Appeals for the Federal Circuit (CAFC) in Torrington v United States, 
82 F. 3d 1039 Fed. Cir. 1996) and by the Department in its recently 
published Final Antidumping Rules (Department of Commerce, Antidumping 
Duties; Countervailing Duties; Final Rule, 62 FR 27296 (May 19, 1997), 
many allocated expenses are considered directly related to a sale even 
though they are not reported on the commercial invoice. Respondents 
state that the fact that these taxes are not on the commercial invoice 
does not mean they are unrelated to the sale and are not included in 
the home market price. Therefore, respondents conclude, if an allocated 
expense can be considered directly related to a sale, so too can the 
PIS/COFINS taxes.
    Lastly, respondents assert that the Department cannot rely on its 
conclusions in the Notice of Final Determination of Sales at Less Than 
Fair Value: Silicon Metal From Argentina, 56 FR 37891 (August 9, 1991) 
(Argentine Silicon Metal) to support its position with respect to the 
Brazilian PIS/COFINS taxes because there are important differences 
between the Brazilian and Argentine taxes. For example, respondents 
note, the Brazilian PIS and COFINS taxes are only imposed on revenue 
from domestic sales and not on a company's gross

[[Page 6910]]

revenue, as is the case with the Argentine taxes which are imposed on 
sales revenue, interest income, bond revenue, and other miscellaneous 
revenues. Therefore, CBCC and Minasligas claim, unlike the Argentine 
system, where taxes are based on all of a company's income sources and 
would be imposed even if there were no domestic sales, there must be 
domestic sales in order for the PIS and COFINS taxes to be imposed in 
Brazil.
    Petitioners argue that under section 773 (a)(6)(B)(iii) of the Act, 
NV may only be reduced by taxes imposed on the ``foreign like product 
or components thereof.'' Petitioners contend that the language of this 
section is virtually identical to that of section 772(d)(1)(C), the 
parallel provision in effect prior to the enactment of the URAA, and 
that the CAFC, in American Alloys, Inc. v. United States, 30 F.3d 
1469,1473 (Fed. Cir. 1994), ruled that the wording of section 
772(d)(1)(C) as well as the legislative history evinces an intent by 
Congress to permit adjustment only upon demonstration of a direct 
relationship between the tax and the commodity or its components. 
Petitioners state that in Ferrosilicon from Brazil, Argentine Silicon 
Metal, Final Results of 3rd and 4th Reviews, the Department clearly 
determined that the PIS and COFINS taxes are not taxes directly imposed 
on the merchandise or components thereof. Thus, petitioners assert, the 
Department did not focus on whether revenue subject to the tax 
consisted of revenue other than sales revenue, but rather based its 
determination not to make the adjustment on the fact that taxes on 
revenue or income of any kind do not constitute taxes imposed directly 
on the merchandise or components thereof. Petitioners assert that the 
SAA makes clear that the type of taxes which warrant adjustment under 
section 773(a)(6)(B)(iii) are home market consumption taxes. Because 
consumption taxes are taxes paid by the consumer on specific sales 
transactions and the PIS and COFINS taxes at issue in this review are 
revenue taxes paid by the seller, petitioners contend, the PIS and 
COFINS taxes are clearly not consumption taxes. As a result, petitioner 
conclude, the Department correctly did not make an adjustment to NV for 
these taxes in its preliminary results of this review and should not do 
so in these final results.
    With respect to the respondents' contention that the Department 
should have made a COS adjustment for these taxes, petitioners argue 
that section 773(a)(6)(B)(iii) of the Act is the sole provision in the 
antidumping law that provides for an adjustment for taxes in the 
context of a price-to-price margin calculation. Petitioners maintain 
that it is an established principle of statutory interpretation that 
when, in the same statute, there are specific terms governing a 
particular subject matter and general terms that could be read to 
address the same subject matter, the specific terms prevail over the 
general. Thus, petitioners assert, if the COS provision in section 
773(a)(6)(C)(iii) of the Act could be invoked to make an adjustment for 
taxes other than those identified in section 773(a)(B)(iii) or in 
circumstances different from those delineated in that provision, 
section 773(a)(6)(B)(iii) would be superfluous. Even if he Department 
could make a COS adjustment for taxes, petitioners argue, the PIS and 
COFINS taxes would not qualify for such an adjustment for the same 
reason that they do not qualify for an adjustment pursuant to section 
773(a)(6)(B)(iii). Petitioners contend that the Department's 
regulations limit allowances for COS adjustments to instances which 
bear a direct relationship to the sales compared. Petitioners assert 
that, because the PIS and COFINS taxes are not imposed directly on 
silicon metal sales transactions, they do not qualify for a COS 
adjustment.
    Department's Position: We agree with petitioners. It is important 
to note that this identical issue has been raised before the Department 
not in only in previous reviews of the instant case (Final Results of 
3rd and 4th Reviews), but in Ferrosilicon from 
Brazil as well. In each of those proceedings and in this instant 
review, the record indicated that the Brazilian PIS and COFINS taxes 
are taxes on gross revenue exclusive of export revenue and, thus, are 
not imposed on the merchandise or components thereof. Therefore, in 
accordance with our consistent practice with respect to these taxes, we 
have again determined for these final results that, because these taxes 
cannot be tied directly to silicon metal sales, we have no statutory 
basis to deduct them from NV. Likewise, because the PIS and COFINS 
taxes are gross revenue taxes, we have again determined they do not 
bear a direct relationship to home market sales and, therefore, do not 
qualify for a COS adjustment.

Comment 26: ICMS Taxes Paid on Inputs

    First, Eletrosilex contends that the Department improperly 
calculated the total cost of manufacturing (TOTCOM) inclusive of ICMS 
taxes paid on inputs as these taxes have been included in the variable 
overhead of Eletrosilex's cost data. Eletrosilex asserts that the 
reported variable overhead included all internal taxes (ICMS, IPI, PIS 
and COFINS) and accordingly, the Department should reduce its TOTCOM 
for the full amount of ICMS taxes included in the COP calculations of 
the preliminary results of this review.
    Second, Eletrosilex argues that the Department should revert to its 
approach in Final Results of 1st Review at 42806, 42808 and 
therefore not include ICMS taxes paid on input material when those 
taxes are offset by a respondent's collection of ICMS taxes on the 
sales of the merchandise. Eletrosilex claims that the Department's 
justification of its current treatment of ICMS taxes stated in the 
Final Results of 3rd Review at 46769 as ``does not account 
for offsets of taxes paid due to home market sales'' and its basis of 
determination on ICMS tax treatment solely on the remittance of 
internal taxes upon exportation of merchandise results in a Department 
position inconsistent with the interpretation of the statute by the 
Court of International Trade and with the requirements of the GATT.
    Further, Eletrosilex states that it is required by the statute to 
include in CV all ``costs of material'' incurred in the production of 
the merchandise. Eletrosilex contends that VAT taxes, like the 
Brazilian ICMS tax, are not a cost of materials and therefore should 
not be included in the CV build up. Eletrosilex states that if a 
producer demonstrates that VAT taxes imposed on inputs are fully 
recouped (i.e. ICMS taxes collected from domestic sales exceed ICMS 
taxes paid to the input suppliers), then ICMS taxes are not a cost of 
materials and should therefore not be in the calculation of CV.
    Dow Corning asserts that ICMS taxes should not be included in the 
cost of production of Eletrosilex or any other Brazilian producer based 
on their ``direct knowledge'' of ICMS taxes and its impact on operation 
costs. Dow Corning states it is knowledgeable on ICMS Tax treatment in 
Brazil because the company has extensive production facilities and a 
sales network in Brazil. Dow Corning states that ICMS taxes are fully 
recouped by the producer on all sales, not just on export sales, and 
therefore ICMS taxes should not be included in the cost of production 
of Eletrosilex or any other Brazilian producer.
    Rima concurs with Eletrosilex that without first determining 
whether VAT paid on material inputs are in fact a cost of such 
materials it is improper to compare CV, inclusive of VAT, with a U.S. 
price, exclusive of VAT. Rima

[[Page 6911]]

argues that in calculating CV, the Department included Brazil's ICMS 
and IPI taxes in the cost build-up. Rima argues that Article VI of the 
GATT and Article 2 of the Tokyo Round Antidumping Code require that 
dumping assessments be tax-neutral. Rima also argues that the Uruguay 
Round Agreements Act 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. Rima argues that in Brazil, VAT paid on 
the supply of input materials can be offset with VAT collected from 
sale of the merchandise produced with such materials. Accordingly, Rima 
argues that in a tax scheme such as Brazil's, a respondent may be able 
to show that a value added tax on inputs did not in fact constitute a 
cost of materials for the exported product within the meaning of 19 
U.S.C. section 1677b(e)(1)(A), Aimcor et al. v. United States, Slip Op. 
95-130 (July 20, 1995) (``AIMCOR''). Therefore, Rima argues that it was 
improper to compare a CV inclusive of VAT to a U.S. price which does 
not include any VAT.
    Petitioners argue that the Department correctly included ICMS and 
IPI taxes in CV, because the statute requires a tax neutral comparison. 
Petitioners argue that in Brazil these taxes paid on inputs are not 
remitted or refunded upon exportation. Petitioners argue that Rima does 
not even claim that the company recovered the ICMS and IPI taxes paid 
on inputs.
    Petitioners argue that the Department's inclusion in CV of ICMS and 
IPI taxes paid on inputs used in metal production is consistent with 
the statute. Petitioners argue that section 773(e) of the Act provides 
that CV shall include cost of materials and that the cost of materials 
shall be determined without regard to any internal tax in the exporting 
country imposed on such materials or their disposition which are 
remitted or refunded upon exportation of the subject merchandise 
produced from such materials. Petitioners argue that according to the 
plain language of the statute, a domestic tax directly applicable to 
materials used in producing exported merchandise is a cost that must be 
included in CV unless, and only if, such tax is remitted or refunded 
upon exportation of the merchandise. Petitioners argue that there is no 
dispute that the ICMS taxes paid on inputs used to produce silicon 
metal exported to the U.S. were not remitted or refunded upon 
exportation.
    Petitioners also argue that including the ICMS taxes paid on inputs 
in CV does not violate the principle of tax neutrality, as expressed in 
the General Agreement on Tariffs and Trade.
    Finally, petitioners argue that Rima's reliance on AIMCOR is 
misplaced, in that petitioners point out that the general clause relied 
upon by the Court of International Trade does not address the specific 
question of how taxes are to be treated in determining the cost of 
materials. Petitioners argue that in AIMCOR the CIT interpreted the 
virtually identical provision of section 773(e)(1)(A) prior to the 
changes made by the Uruguay Round Act. Petitioners argue that the CIT's 
interpretation of the statute is wrong because it relies on the general 
clause at the end of the provision stating that the cost of materials 
to be included in CV is to be determined at a time preceding the date 
of exportation. Moreover, petitioners argue that clause is not part of 
the current statute.
    Petitioners contend that the Department correctly included an 
amount for ICMS taxes in the calculation of CV. Petitioners cite to 
Section 773(e) of the Act, which states that ``the costs of materials 
shall be determined without regard to any internal tax in the exporting 
country imposed on such materials or their disposition which are 
remitted or refunded upon exportation of the subject merchandise 
produced from such materials.'' Petitioners point out that because the 
ICMS taxes paid on inputs used to produce silicon metal exported to the 
United States were not remitted or refunded upon exportation, the ICMS 
taxes were correctly included in CV.
    Department's Position: We disagree with Eletrosilex that ICMS taxes 
are included in its reported total manufacturing costs (TOTCOM) as 
variable overhead. Evidence on the record (see Eletrosilex's November 
12, 1996 and January 7, 1998 questionnaire responses) contradicts this 
assertion. Specifically, Eletrosilex provided a worksheet which breaks 
out all the components of variable overhead. ICMS taxes are not 
accounted for on this worksheet. Furthermore, Eletrosilex provided 
worksheets detailing, on a monthly basis, the amounts of ICMS taxes 
paid on secondary material and direct material inputs. The sum of these 
taxes in each month exceeds the amount Eletrosilex reported as variable 
overhead for that month. Therefore, we conclude that the reported 
TOTCOM does not include ICMS.
    With respect to the broader issue of whether ICMS and IPI taxes 
should be included in CV, we have an established practice regarding the 
treatment of such taxes in calculating CV. See, e.g., Ferrosilicon from 
Brazil, Final Redetermination on Remand of Sales at Less Than Fair 
Value, at 10 (January 16, 1996); Ferrosilicon from Brazil, Final 
Results of Antidumping Duty Administrative Review, 61 FR 59407, 59414 
(November 22, 1996); Silicon Metal From Brazil; Final Results of 
Antidumping Duty Administrative Review and Determination Not to Revoke 
in Part, 63 FR 1954, 1965 (January 14, 1997); Silicon Metal From 
Brazil; Final Results of Antidumping Duty Administrative Review and 
Determination Not to Revoke in Part, 62 FR 1970, 1976 (January 14, 
1997). Our practice is governed by section 773(e)(1)(A) of the Act, 
which requires that taxes paid on inputs be included in CV when such 
taxes are not remitted or refunded upon exportation of the final 
product. We have considered and rejected in other cases arguments 
similar to those respondents have made here that, because the amount of 
ICMS and IPI taxes paid on inputs used in producing exported 
merchandise is credited against the liability for taxes collected on 
home market sales, the taxes paid on inputs should not be included in 
CV.
    Section 773(e) of the Act directs us to exclude from CV only those 
internal taxes remitted or refunded upon export. Therefore, if the 
taxes paid on production inputs are neither remitted nor refunded upon 
exportation of the subject merchandise, the ability of the manufacturer 
to recoup this tax expense through domestic market sales is not 
automatic and also not relevant. Thus, we calculated the ICMS and IPI 
taxes as a percentage of the total purchases of materials and energy, 
and we added this amount to the reported CV.
    We note that on November 25, 1997, the U.S. Court of International 
Trade remanded to the Department the determination in the LFTV 
investigation of Silicon Metal from Brazil. Camargo Correa Metais, 
S.A., v. United States, Slip Op. 97-159, November 25, 1997. The Court 
ordered the Department to change its treatment of ICMS taxes in the 
calculation of constructed value. In ordering the remand, the Court 
held that ICMS taxes are remitted or refunded upon exportation of the 
subject merchandise within the meaning of the pre-URAA antidumping 
statute (section 773(e)(1)(A)). The Department is in the process of 
reviewing the Court's decision, as well as other relevant CIT 
decisions, and their implications for the Department's treatment of 
Brazilian value-added taxes. The Department's determination on remand 
is due to the Court by February 24, 1998.

[[Page 6912]]

V. Other Comments

Comment 27: Control Numbers

    Petitioners assert that CBCC's reported control numbers are 
unreliable. Petitioners contend that not only does CBCC's product 
brochure describe two different types of silicon metal produced and 
sold by CBCC (silicon metal for the aluminum industry and silicon metal 
designed for chemical and metallurgical industries) which have distinct 
chemical specifications, but an examination of CBCC's U.S. sales 
indicates that CBCC sold silicon metal for both applications during the 
review period. Petitioners state that, while the Department clearly 
instructed CBCC in the Department's second supplemental questionnaire 
to report the chemical composition of the merchandise it sold in the 
home market during the POR, CBCC failed to provide this information, 
stating that the information would be available at verification. 
However, petitioners assert, because the Department subsequently 
canceled its scheduled verification of CBCC's home market sales 
information and CBCC failed to subsequently report this information, 
there is no way to ensure that CBCC's reported home market control 
numbers are accurate and the Department is therefore unable to perform 
a proper product matching. As a result, petitioners assert, the 
Department should base its calculation of normal value for CBCC on CV. 
In the alternative, petitioners contend, the Department should require 
CBCC to report the chemical composition of its home market merchandise 
and to re-report control numbers which reflect the chemical composition 
and the grade of merchandise described in CBCC's product brochure.
    CBCC argues that the petitioners' assertions are unfounded for the 
following reasons: First, CBCC states, the petitioners have 
misinterpreted the nature of CBCC's reported U.S. sales. CBCC asserts 
that the customer for one of the U.S. sales identified by the 
petitioners in its case brief clearly did not purchase silicon metal 
for chemical or metallurgical applications. In addition, CBCC argues 
that the difference in the per-ton price of this U.S. sale compared to 
that for its other U.S. sales is not due to differences in chemical 
composition as the petitioners assert, but rather is the result of (1) 
the fact that the sale included ocean freight costs, and (2) the fact 
that the sale was made at the end of the review period at a time when 
the price of silicon metal was lower in the U.S. market than it was at 
the time the other U.S. sales were made. Second, CBCC maintains that 
the record demonstrates that it sold only one type of product in the 
U.S. and home markets during the review period and, as a result, it 
correctly reported the same control number for all its home market and 
U.S. sales. Third, CBCC argues that its brochure is intended for 
general customer use and informs potential customers about the types of 
products that CBCC can produce and sell. Thus, CBCC contends, simply 
because the brochure identifies different product types does not 
automatically indicate that it sold both types during the review 
period. Finally, CBCC asserts that the petitioners provide no support 
whatsoever to demonstrate that the information it provided in its 
response was incorrect or hinders the Department's ability to make 
appropriate price comparisons.
    Department's Position: We agree with CBCC. Not only does the record 
in this review lack information which calls into question the accuracy 
of CBCC's reported control numbers but the petitioners have not 
provided any evidence supporting their contentions. For example, while 
we asked respondents to submit a copy of their product brochures, we 
recognize that not every product in the brochure may be produced and 
sold by the company during our identified review periods. As a result, 
we agree with CBCC that such brochures serve the purpose of only 
identifying the range of products available and that there is no basis 
for the assertion that all products identified in a brochure will 
necessarily be produced and sold during a review period. Thus, we do 
not accept CBCC's product brochure as evidence that CBCC sold more than 
one type of subject merchandise in the U.S. and home markets during the 
review period. Furthermore, while the petitioners assert that a certain 
U.S. sale was of silicon metal for chemical or metallurgical 
applications, we are satisfied with CBCC's explanation rebutting this 
contention and note that while petitioners claim the chemical 
composition of this sale warrants its classification as sale for 
chemical or metallurgical applications, the petitioners provide no 
evidence supporting this contention. Finally, not only did CBCC report 
detailed chemical compositions for its U.S. sales which demonstrate the 
appropriateness of using a single control number, but it clearly 
indicated in its responses that there was no major variation in the 
chemical compositions between its U.S. and home market sales. In light 
of this and the absence of any record evidence which supports 
petitioners' contentions or otherwise calls into question the accuracy 
of CBCC's reported control numbers, for these final results we have 
again accepted CBCC's reported control numbers and have not altered the 
model-match portion of our analysis.

Comment 28: Discrepancy on Information Reported by Dow Corning

    Petitioners argue that the Department should require Dow to (1) 
explain the discrepancy in the quantity of imports Dow indicated it 
purchased from Eletrosilex, and the quantity of exports Eletrosilex 
states that it sold to Dow during the POR, and (2) submit the audit 
documents used to derive the per-unit depreciation amount submitted in 
its case brief. In a letter dated December 26, 1997, Dow Corning stated 
that ``We have reviewed our records for the period of review, including 
the commercial invoices received from Eletrosilex and our records of 
merchandise, and find that we erred in the quantity we referenced in 
our Case Brief.'' In this letter, Dow also indicated that its record of 
imports from Eletrosilex match the quantity Eletrosilex claimed it 
exported to Dow during the POR. Petitioners submitted a letter on 
January 8, 1998 which reiterates their rebuttal brief positions, and 
asserts that the Department remove Dow's letter of December 26, 1997 
from the record of this proceeding because, pursuant to 19 CFR 
353.31(a)(3), the Department ``will not consider...in the final 
results, or retain in the record of the proceeding, any factual 
information submitted after the applicable time limit.''
    Department's Position: In their rebuttal brief, petitioners 
requested that the Department require Dow to explain the discrepancy in 
the quantity of imports as reported separately by Dow and Eletrosilex. 
Dow provided an explanation in its December 26, 1997 letter. 
Petitioners have also commented on this submission. Accordingly, the 
Department, in its discretion, has accepted Dow Corning's December 26, 
1997 letter.
    In its letter, Dow explained that it erred in calculating the total 
quantity shipped during the period of review. Dow has recalculated the 
total quantity shipped by examining and applying data from the original 
invoices. Dow's recalculation is consistent with that reported by 
Eletrosilex in its response. Further, nothing in petitioners' January 
8, 1998 letter disputes the accuracy of this information. Accordingly, 
the Department is satisfied with Dow's explanation of the discrepancy 
in quantity in this case. Therefore, the Department's calculation of 
quantity is

[[Page 6913]]

based upon information submitted by the respondent Eletrosilex.
    With respect to petitioners' argument that the Department should 
request additional information from Dow due to discrepancies in the 
amounts reported by Dow and Eletrosilex for depreciation expenses, we 
disagree. The information submitted by Dow is not relevant to the 
Department's analysis. First, the data submitted by Dow were 
illustrative, in that the company was making the point that its 
independent auditors concluded that Eletrosilex was selling its 
products above the cost of production. Dow did not provide this 
information to the Department as a substitute for the information 
reported by Eletrosilex. Dow stipulated that its cost data were 
gathered for a completely different purpose, notably to determine 
whether the financial position of Eletrosilex was sufficiently sound 
for Dow to establish a long-term supply agreement. Second, this 
information would only serve to confuse the issue. Dow's auditors 
utilized a different period in their calculations than the Department, 
and calculated depreciation in U.S. dollars, while the Department 
calculated depreciation in Brazilian currency. Finally, this 
information is clearly unnecessary. The Department requested and 
received information on this issue in the original and supplemental 
questionnaire responses by Eletrosilex.

Final Results of Review

    As a result of our analysis of the comments received, we determine 
that the following margins exist for the period March 1, 1995 through 
February 29, 1997:

------------------------------------------------------------------------
                                                                Percent 
                    Manufacturer/exporter                        margin 
------------------------------------------------------------------------
CBCC.........................................................       0.00
Eletrosilex..................................................      39.00
Minasligas...................................................       1.67
Rima.........................................................       3.08
------------------------------------------------------------------------

    The Department shall determine, and the Customs Service shall 
assess, antidumping duties on all appropriate entries. For assessment 
purposes, we have calculated importer-specific ad valorem duty 
assessment rates for the merchandise based on the ratio of the total 
amount of antidumping duties calculated for the examined sales during 
the POR to the total quantity of sales examined during the POR. This 
method has been upheld by the courts. (See e.g., Antifriction Bearings 
(Other Than Tapered Roller Bearings) from France, Germany, Italy, 
Japan, Singapore, and the United Kingdom; Final Results of Antidumping 
Duty Administrative Reviews, 61 FR 2081, 2083 (January 15, 1997); FAG 
Kugelfischer Georg Schafer KgaAv. United States, No. 92-07-00487, 1995 
Ct. Int'l Trade LEXIS 209, at CIT*10 (September 14, 1995), aff'd. No. 
96-1074 1996 U.S. App. Lexis 11544 (Fed. Cir. May 1996).
    The Department will issue appraisement instructions directly to the 
Customs Service. Individual differences between United States price and 
NV may vary from the percentages stated above. 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 
Act, and will remain in effect until publication of the final results 
of the next administrative review: (1) the cash deposit rates for the 
reviewed companies will be those rates listed above except for CBCC, 
which had a de minimis margin, and whose cash deposit rate is therefore 
zero; (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 manufacturer of 
the merchandise; and (4) if neither the exporter nor the manufacturer 
is a firm covered in this or any previous review or in the LTFV 
investigation 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 Act (19 U.S.C. Sec. 1675(a)(1)) and 19 CFR 
353.22.

    Dated: February 4, 1998.
Robert S. LaRussa,
Assistant Secretary for Import Administration.
[FR Doc. 98-3488 Filed 2-10-98; 8:45 am]
BILLING CODE 3510-DS-P