[Federal Register Volume 63, Number 151 (Thursday, August 6, 1998)]
[Notices]
[Pages 42001-42008]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 98-21061]


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DEPARTMENT OF COMMERCE

International Trade Administration
[A-351-806]


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

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

ACTION: Notice of Preliminary Results of the Antidumping Duty 
Administrative Review.

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SUMMARY: In response to requests by American Silicon Technologies, 
Elkem Metals Company, Globe Metallurgical, Inc. and SKW Metals & 
Alloys, Inc. (petitioners) and Companhia Brasileira Carbureto De Calcio 
(CBCC), Eletrosilex Belo Horizonte (Eletrosilex), Ligas de Aluminio 
S.A. (LIASA), Companhia Ferroligas Minas Gerais-Minasligas (Minasligas) 
and RIMA Industrial S/A (RIMA) (respondents), the Department of 
Commerce (the Department) is conducting an administrative review of the 
antidumping duty order on silicon metal from Brazil. The period of 
review (POR) is July 1, 1996 through June 30, 1997.
    We preliminarily determine that only Eletrosilex sold subject 
merchandise at less than normal value (NV) during the POR. If the 
preliminary results are adopted in the final results of administrative 
review, we will instruct the U.S. Customs Service to assess antidumping 
duties based on the difference between the export price (EP) and the 
NV.
    We invite interested parties to comment on the preliminary results. 
Parties who submit comments in this proceeding should also submit with 
the argument: (1) A statement of the issue(s); and (2) a brief summary 
of the argument (not to exceed five pages).

EFFECTIVE DATE: August 6, 1998.

FOR FURTHER INFORMATION CONTACT: Robert Bolling, Abdelali Elouaradia, 
Letitia Kress, Lisette Lach or Sinem Sonmez, Office of Antidumping/
Countervailing Enforcement, Group III, Import Administration, 
International Trade Administration, U.S. Department of Commerce, 14th 
Street and Constitution Avenue, N.W., Washington, D.C. 20230; telephone 
482-3793.

SUPPLEMENTARY INFORMATION:

Applicable Statute and Regulations

    Unless otherwise indicated, all citations to the 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 refer to 19 
CFR part 351 (62 FR 27296 (May 19, 1997)).

Background

    On July 31, 1991, the Department published in the Federal Register 
the antidumping duty order on silicon metal from Brazil (56 FR 36135). 
On July 21, 1997, the Department published in the Federal Register a 
notice of opportunity to request an administrative review of the 
antidumping duty order on silicon metal from Brazil for the period July 
1, 1996 through June 30, 1997 (62 FR 38973). On July 29, 1997, in 
accordance with 19 CFR 351.213(b)(1), CBCC, Minasligas, Eletrosilex, 
and RIMA requested that the Department conduct an administrative review 
of their respective sales. On July 31, 1997, LIASA requested that the 
Department conduct an administrative review of its sales. On July 31, 
1997, petitioners also requested that the Department conduct an 
administrative review on sales made by CBCC, Eletrosilex, Minasligas 
and RIMA. On September 22, 1997, the Department issued the antidumping 
administrative review questionnaire to all respondents. On September 
25, 1997, in accordance with 19 CFR 351.221(b)(1) of the Department's 
regulations, the Department published in the Federal Register a notice 
of initiation of this antidumping duty administrative review (62 FR 
50292). The Department is conducting this review in accordance with 
section 751 of the Act.
    On March 24, April 24, and July 2, 1998, we issued supplemental 
questionnaires to CBCC. We received responses from CBCC on April 15, 
April 30, and July 14, 1998, respectively. On March 20, April 30, April 
22, and July 13, 1998, we issued supplemental questionnaires to LIASA. 
We received responses from LIASA, on April 3, April 27, April 30, and 
July 20, 1998, respectively. On March 30, and July 2, 1998, we issued 
supplemental questionnaires to Minasligas. We received responses from 
Minasligas, on April 14, and July 9, 1998, respectively. On March 31, 
June 29, and July 2, 1998, we issued supplemental questionnaires to 
RIMA. We received responses from RIMA, on April 17, July 9, and July 
13, 1998, respectively. On March 24, June 29, and July 6, 1998, we 
issued supplemental questionnaires to Eletrosilex. We received a 
response from Eletrosilex on April 10, 1998. However, Eletrosilex did 
not respond to the

[[Page 42002]]

Department's final two supplemental questionnaires. See Use of Facts 
Available section below.
    On March 27, 1998, in accordance with section 751(a)(3)(A) of the 
Act, the Department published in the Federal Register its notice 
extending the deadline in the preliminary results until July 30, 1998 
(63 FR 14900).

Scope of Review

    The merchandise covered by this administrative 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 administrative 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. Although the HTS 
item numbers are provided for convenience and for U.S. Customs 
purposes, the written description remains dispositive.

Period of Review

    The POR is July 1, 1996 through June 30, 1997.

Verification

    As provided in section 782(i) of the Act, we verified LIASA's sales 
and cost information from May 4, 1998 through May 9, 1998, and CBCC's 
sales and cost information from May 11, 1998 through May 16, 1998. At 
each verification, we used standard verification procedures, including 
on-site inspection of the manufacturers' facilities, the examination of 
relevant sales and financial records, and the selection of original 
source documentation containing relevant information. Our verification 
results are outlined in the public version of the respective 
verification reports, available to the public in Room B-099 of the U.S. 
Department of Commerce.

Product Comparisons

    In accordance with section 771(16) of the Act, we considered all 
products produced by the respondents, covered by the description in the 
``Scope of the Review'' section, above, and sold in the home market 
during the POR, to be foreign like products for purposes of determining 
appropriate product comparisons to U.S. sales. Where there were no 
sales of identical or similar merchandise in the home market to compare 
to U.S. sales, we compared U.S. sales to the constructed value (CV) of 
the product sold in the U.S. market during the comparison period.
    On January 8, 1998, the U.S. Court of Appeals for the Federal 
Circuit issued a decision in Cemex S.A. v. United States, 133 F. 3d 897 
(Fed. Cir. 1998). In that case, based on the pre-URAA version of the 
Act, the Court discussed the appropriateness of using CV as the basis 
for foreign market value when the Department finds foreign market sales 
to be outside ``the ordinary course of trade.'' This issue was not 
raised by any party in this proceeding. However, the URAA amended the 
definition of sales outside the ``ordinary course of trade'' to include 
sales below cost. See section 771(15) of the Act. Consequently, the 
Department has reconsidered its practice in accordance with this court 
decision and has determined that it would be inappropriate to resort 
directly to CV, in lieu of foreign market sales, as the basis for NV if 
the Department finds foreign market sales of merchandise identical or 
most similar to that sold in the United States to be outside the 
``ordinary course of trade.'' Instead, the Department will use sales of 
similar merchandise, if such sales exist. The Department will use CV as 
the basis for NV only when there are no above-cost sales that are 
otherwise suitable for comparison. Therefore, in this proceeding, when 
making comparisons in accordance with section 771(16) of the Act, we 
considered all products sold in the home market as described in the 
``Scope of the Review'' section of this notice, above, that were in the 
ordinary course of trade for purposes of determining appropriate 
product comparisons to U.S. sales. Where there were no sales of 
identical merchandise in the home market made in the ordinary course of 
trade to compare to U.S. sales, we compared U.S. sales to sales of the 
most similar foreign like product made in the ordinary course of trade, 
based on the information provided by each respondent in response to our 
antidumping questionnaire. We have implemented the Court's decision in 
this case to the extent that the data on the record permitted.

Fair Value Comparisons

    To determine whether sales of silicon metal by the Brazilian 
respondents to the United States were made at less than fair value, we 
compared EP to the NV, as described in the ``Export Price'' and 
``Normal Value'' sections of this notice. In accordance with section 
777A(d)(2), we calculated monthly weighted-average prices for NV and 
compared these to individual U.S. transactions.

Export Price

    For CBCC, Eletrosilex, LIASA, Minasligas and RIMA, we used the 
Department's export price (EP) methodology, in accordance with section 
772(a) of the Act, because the subject merchandise was sold by the 
producer outside the United States directly to the first unaffiliated 
purchaser in the United States prior to importation.
    We made company-specific adjustments to EP as follows:

CBCC

    In accordance with section 772(c) of the Act, we calculated EP 
based on packed, delivered prices to the first unaffiliated purchasers 
in the United States or to unaffiliated trading companies who sell the 
subject merchandise in the United States. We made deductions from the 
starting price (gross unit price), where appropriate, for foreign 
inland freight, brokerage and handling, international freight.

Eletrosilex

    In accordance with section 772(c) of the Act, we calculated EP 
based on packed, delivered prices to the first unaffiliated customer in 
the United States or to unaffiliated trading companies who sell the 
subject merchandise in the United States. We made deductions from the 
starting price (gross unit price), where appropriate, for foreign 
inland freight, brokerage and handling, and international freight, and 
added duty drawback.

LIASA

    In accordance with section 772(c) of the Act, we calculated EP 
based on packed, delivered prices to the first unaffiliated customer in 
the United States or to unaffiliated trading companies who sell the 
subject merchandise in the United States. We made deductions from the 
starting price (gross unit price), where appropriate, for foreign 
movement expenses. Upon our findings at verification, we modified the 
value for inland freight and packing, as appropriate. See LIASA's 
Verification Report dated July 30, 1998 and Memorandum dated July 30, 
1998.
    On May 1, 1998, petitioners requested in their pre-verification 
comments that the Department closely examine a particular sale in the 
LIASA U.S. sales database during its verification of

[[Page 42003]]

LIASA data. Petitioners stated that it appeared that this particular 
sale was not representative of a normal commercial transaction due to 
its aberrant sale price, quantity, and unusual mode of transportation. 
Thus, petitioners requested that the Department use its authority to 
exclude from the margin calculation this U.S. sale as it is distortive, 
atypical and unrepresentative of an arm's-length transaction.
    At verification, the Department examined the sale in question. See 
LIASA Verification Report dated July 29, 1998. The evidence on the 
record indicates that this sale is a testing/trial run sale. See 
LIASA's Verification Exhibit 4 and verification report at pages 6-9. 
Because consideration was paid for the merchandise, we preliminarily 
determine in accordance with the Department's practice regarding 
samples to include this sale in our calculations. See Antifriction 
Other than Tapered Roller Bearings from France; Final Results of 
Antidumping Duty Administrative Review, 62 FR 2081, 2122 (January 15, 
1997). Further, we preliminarily do not find that it is distortive or 
unrepresentative and should therefore be excluded.

Minasligas

    In accordance with section 772(c) of the Act, we calculated EP 
based on packed, delivered prices to the first unaffiliated customer in 
the United States or to unaffiliated trading companies who sell the 
subject merchandise in the United States. We made adjustments from the 
starting price (FOB unit price), where appropriate, for foreign 
movement expense (comprising weighing, sampling and analysis, and port 
clerical expenses), inland freight, brokerage and handling, and duty 
drawback. We used the FOB unit price (a gross unit price in dollars) 
since Minasligas negotiated its U.S. sales in U.S. dollars. We also 
made modifications to the payment date. We used the date of payment by 
the U.S. customer to Minasligas for each sale rather than the date of 
payment by the bank to Minasligas. The date of payment information was 
provided to the Department in Minasligas's April 13, 1998 submission. 
In addition, we recalculated the interest rate to be used in 
Minasligas's U.S. credit expense calculation. For our calculation of 
the interest rate for U.S. sales, we relied on the Advance Exchange 
Contract (``ACC'') information presented in the company's April 13, 
1998 submission.
    Because Minasligas does not know the entry dates of its U.S. sales, 
it reported all shipments made during the POR, which included two 
shipments that were reported in the fifth administrative review. We 
have excluded the two U.S. sales that were reported in the fifth 
administrative review from our calculation as we have calculated a 
margin on these sales in the last review.

RIMA

    In accordance with section 772(c) of the Act, we calculated EP 
based on packed, delivered prices to the first unaffiliated customer in 
the United States or to unaffiliated trading companies who sell the 
subject merchandise in the United States. We made deductions from the 
starting price (gross unit price), where appropriate, for domestic 
inland freight, brokerage and handling, and ocean freight.

Normal Value

A. Viability

    In order to determine whether there was a sufficient volume of 
sales in the home market to serve as a viable basis for calculating NV 
(i.e., the aggregate volume of home market sales of the foreign like 
product is greater than five percent of the aggregate volume of U.S. 
sales), we compared each respondent's volume of home market sales of 
the foreign like product to the volume of its U.S. sales of subject 
merchandise, in accordance with section 773(a)(1) of the Act. Since 
each respondent's aggregate volume of home market sales of the foreign 
like product was greater than five percent of its respective aggregate 
volume of U.S. sales for the subject merchandise, we determined that 
the home market provides a viable basis for calculating NV for each 
respondent. Therefore, pursuant to section 773(a)(1)(B) of the Act, we 
based NV on home market sales.

B. Home Market Sales

    We based NV on the price at which the foreign like product was 
first sold for consumption in Brazil, in the usual commercial 
quantities, in the ordinary course of trade in accordance with section 
773(a)(1)(B)(i) of the Act. To the extent practicable, we based NV on 
sales at the same level of trade as the EP sales. For level of trade, 
please see the level of trade section below.
    We made company-specific adjustments to the NV prices as follows:

CBCC

    We based home market prices on the packed, delivered prices to 
affiliated and unaffiliated purchasers in the home market. Where 
appropriate, we used CV as the basis of NV. We made adjustments, where 
applicable, in accordance with section 773(a)(6) of the Act. Where 
applicable, we made adjustments to home market price for inland 
freight. To adjust for differences in circumstances of sale between the 
home market and the United States, we adjusted home market prices by 
deducting HM credit expenses and adding HM interest revenue and adding 
U.S. credit expenses (offset by interest revenue), U.S. post-sale 
warehousing, and U.S. direct selling expenses. In order to adjust for 
differences in packing between the two markets, we adjusted home market 
price by deducting HM packing costs and adding U.S. packing costs. Home 
market prices were reported inclusive of value-added taxes (VAT) and, 
therefore, a deduction for VAT was necessary.
    Because CBCC paid commissions on home market sales, in calculating 
NV for this respondent, we added the lesser of either: (1) the 
weighted-average amount of commissions paid on the home market sales; 
or (2) the amount of indirect selling expenses paid on the U.S. sale. 
See 351.410(e) of the Department's regulations.

Eletrosilex

    We based home market prices on the packed, delivered prices to 
affiliated and unaffiliated purchasers in the home market. We made 
adjustments, where applicable, in accordance with section 773(a)(6) of 
the Act. Where applicable, we made adjustments to home market price for 
inland freight. To adjust for differences in circumstances of sale 
between the home market and the United States, we adjusted home market 
prices by deducting HM credit expense and other HM direct selling 
expenses and adding U.S. directs selling expenses, including U.S. 
credit expenses. In order to adjust for differences in packing between 
the two markets, we deducted HM packing costs and added U.S. packing 
costs. Home market prices were reported exclusive of VAT and, 
therefore, no deduction was necessary.
    Although Eletrosilex provided the Department with credit expenses 
based on Reais and U.S. dollar borrowings, the Department calculated 
home market credit expense based on Reais denominated loans.

LIASA

    We based home market prices on the packed, delivered prices to 
affiliated and unaffiliated purchasers in the home market. Where 
appropriate, we used CV as the basis of NV. We made adjustments, where 
applicable, in accordance with section 773(a)(6) of the Act. Where 
applicable, we made adjustments for movement expenses. To

[[Page 42004]]

adjust for differences in circumstances of sale between the home market 
and the United States, we reduced home market prices by the amounts for 
direct selling expenses including credit and commission expenses and 
added U.S. credit expenses. In order to adjust for differences in 
packing between the two markets, we deducted HM packing costs and added 
U.S. packing costs. Home market prices were reported inclusive of VAT 
and, therefore, a deduction for VAT was necessary.

Minasligas

    We based home market prices on the packed, delivered prices to 
affiliated and unaffiliated purchasers in the home market. We made 
adjustments, where applicable, in accordance with section 773(a)(6) of 
the Act. Where applicable, we made adjustments for movement expenses. 
To adjust for differences in circumstances of sale between the home 
market and the United States, we reduced home market prices by an 
amount for home market credit expenses and added U.S. credit expenses. 
In order to adjust for differences in packing between the two markets, 
we adjusted home market price by deducting HM packing costs and adding 
U.S. packing costs. Home market prices were reported inclusive of VAT 
and, therefore, a deduction for VAT was necessary.

RIMA

    We based home market prices on the packed, delivered prices to 
affiliated or unaffiliated purchasers in the home market. Where 
appropriate, we used CV as the basis of NV. We made adjustments, where 
applicable, in accordance with section 773(a)(6) of the Act. Where 
applicable, we made adjustments for inland freight. To adjust for 
differences in circumstances of sale between the home market and the 
United States, we adjusted home market prices by deducting HM credit 
expenses and commissions and adding HM interest revenue and adding U.S. 
credit expenses. In order to adjust for differences in packing between 
the two markets, we adjusted home market price by deducting HM packing 
costs and adding U.S. packing costs. Home market prices were reported 
inclusive of VAT and, therefore, a deduction for VAT was necessary.
    Because Rima paid commissions on home market sales, in calculating 
NV for this respondent, we added the lesser of either: (1) the 
weighted-average amount of commissions paid on the home market sales; 
or (2) the amount of indirect selling expenses paid on the U.S. sale. 
See 351.410(e) of the Department's regulations.

C. ICMS Tax

    In general, most foreign governments that establish value-added 
taxes (``VAT'') allow for a credit for VAT paid on inputs that can be 
used to offset tax liability to the government arising from home market 
sales (i.e., VAT collected from domestic customers). In addition, most 
foreign governments allow for a rebate or remittance of the tax paid on 
material inputs upon the exportation of the finished product, provided 
companies submit documentation that such inputs are used in the 
products for exportation.
    Under Brazil's VAT system, however, there is no provision for 
refunding the taxes based upon export sales. Rather, in Brazil's system 
only a tax credit arises upon the purchase of inputs for use in the 
finished product. That credit can be used to offset tax liability to 
the government arising from sales in the domestic market (i.e., ICMS 
taxes collected from home market customers) to the extent that a 
company makes such sales in the home market.
    In the past, the Department included ICMS taxes in the calculation 
of CV because such taxes are considered a cost of production. However, 
recent decisions by the Court of International Trade (CIT) on this 
issue have accorded substantial weight to the ``economic reality'' of 
the Brazilian tax system which in some circumstances allows for 
recovery of the ICMS tax paid on material inputs used in the production 
of export sales. See Aimcor v. United States, 19 CIT 966 (CIT 1995); 
Camargo Correa Metais, S.A. v. United States, 17 CIT 897, 911 (CIT 
1993). In light of these decisions, the Department is reconsidering its 
current policy of including ICMS tax in CV.
    We will now no longer assume that VAT taxes are a cost when 
calculating CV. Instead, we will examine the actual experience of each 
producer/exporter subject to an investigation or review. If any 
exporter/producer is able to demonstrate that it was able to offset its 
tax liability on domestic sales, no addition for such taxes should be 
made in calculating CV for that producer/exporter. Similarly, if any 
producer/exporter is able to use only a portion of the credits 
generated by export sales we will treat as a cost in calculating CV 
only that portion which was not used during the period. Only if a 
producer/exporter is unable to use any of the tax credits, or if the 
producer/exporter fails to provide satisfactory evidence of its tax 
experience on this question, will we continue to treat the entire 
amount of VAT taxes as a direct cost in calculating CV. The Department 
invites comment from interested parties with respect to this issue.
    Additionally, CBCC, LIASA, and Minasligas have noted that Brazil's 
new ICMS tax law allows companies to use ICMS tax credits generated 
during the POR for the reduction in payment of electricity costs. These 
companies have requested that the Department reduce their ICMS tax paid 
during the POR by the amount of tax credits used for electricity after 
the POR, because such credits were generated during the POR. We 
preliminarily determine that, since the companies used these tax 
credits after the POR, that would be the appropriate time to account 
for this reduction in these companies' ICMS tax credit balance.

Price to Price Comparisons

    Where there were contemporaneous sales of the comparison product 
that passed the COP test, we based NV on home market prices.

Price to CV Comparisons

    When we based NV on CV, we calculated CV in the manner described 
below. See ``Cost of Production (COP) Analysis'' section. Where we 
compared export prices to CV, we deducted from CV the weighted-average 
home market direct selling expenses and added the U.S. direct selling 
expenses, where applicable, in accordance with sections 773(a)(8) and 
773(a)(6)(C)(iii) of the Act.

Cost of Production (COP) Analysis

    On February 11, 1998, the Department published in the Federal 
Register the final results of the fifth administrative review on 
silicon metal from Brazil. See Final Results of Antidumping Duty 
Administrative Review: Silicon Metal From Brazil, 63 FR 6899. In that 
review, in accordance with section 773(b)(1) of the Act, the Department 
disregarded home market sales found to be below COP for CBCC, 
Eletrosilex, Minasligas and RIMA. Therefore, in accordance with section 
773(b)(2)(A)(ii) of the Act, the Department has reasonable grounds to 
believe or suspect that sales of the foreign like product under 
consideration for the determination of NV in this review may have been 
made at prices below the COP as provided by section 773(b)(2)(A)(ii) of 
the Act. Therefore, pursuant to section 773(b)(1) of the Act, we 
initiated an investigation to determine whether these respondents made 
home market sales during the POR at prices below their COP. In 
addition, on March 16, 1998, we initiated a below-cost investigation 
for LIASA pursuant to petitioners' allegation on

[[Page 42005]]

December 12, 1997. See 1996-1997 Administrative Review of the 
Antidumping Duty Order on Silicon Metal from Brazil: Analysis of 
Petitioners' Allegation of Sales Below the Cost of Production (``COP'') 
for Ligas de Aluminio S.A.

A. Calculation of COP

    In accordance with section 773(b)(3) of the Tariff Act, we 
calculated COP based on the sum of each respondent's cost of materials 
and fabrication employed in producing the foreign like product, plus 
amounts for home market general and administrative expenses and packing 
costs. We relied on the home market sales and COP information that each 
respondent provided in its questionnaire responses. We adjusted each 
respondent's reported COP as follows:

CBCC

    As a result of verification findings, we recalculated depreciation 
based on the Departmental methodology. See CBCC's 1996-1997 
Verification Report dated July 30, 1998, and Analysis Memorandum on the 
Sixth Administrative Review of Silicon Metal from Brazil from Lisette 
Lach through James Doyle to the File dated July 30, 1998 
(``Memorandum''), a public version of which is in the file in Central 
Records, Room B-099 at the U.S. Department of Commerce.
    We recalculated CBCC's G&A expenses using CBCC's and Solvay & Cie's 
1996 G&A expenses and COGS as reported in Exhibit 3 of CBCC's November 
21, 1997 submission, because it is Departmental practice to calculate 
G&A expenses on an annual basis as a ratio of total G&A expenses 
divided by cost of goods sold (COGS). See Certain Corrosion-Resistant 
Carbon Steel Flat Products and Certain Cut-to-Length Carbon Steel Plate 
from Canada; Notice of Final Antidumping Duty Administrative Reviews, 
62 FR 18448, 18456 (April 15, 1997). To obtain the amount of unit G&A 
expense for the POR, we multiplied the G&A expense ratio for CBCC and 
Solvay & Cie by the unit COM of the merchandise under investigation. 
See CBCC's Memorandum and Attachment to that Memorandum.
    Additionally, the Department recalculated CBCC's cost of 
manufacture because CBCC did not provide its COP for self-produced 
charcoal. Instead, CBCC only provided costs based on its purchases of 
charcoal from an unaffiliated supplier(s). Therefore, we had to apply 
facts available in accordance with section 776(a) of the Act for the 
cost of self-produced charcoal. As facts available, we used as the cost 
for CBCC's self-produced charcoal the prices that CBCC paid to 
unaffiliated supplier(s) for purchased charcoal. Therefore, we have 
recalculated the cost of CBCC's charcoal production by using the annual 
average cost CBCC was charged by unaffiliated supplier(s). See CBCC's 
Verification Report dated July 30, 1998 and Memorandum dated July 30, 
1998.
    The Department's established policy is to calculate interest 
expenses (INTEX) incurred on behalf of the consolidated group of 
companies (e.g., Solvay & Cie) to which the respondent belongs, based 
on consolidated financial statements. This practice recognizes two 
facts: (1) The fungible nature of invested capital resources such 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 38058 (July 16, 1997). 
Accordingly, we recalculated INTEX by multiplying the reported the 
percentage of Solvay & Cie's financial expenses by cost of manufacture 
(COM). See CBCC's Memorandum and Attachment to Memorandum.

Eletrosilex

    As a result of our determination to recalculate interest expense 
based on the facts available (see facts available section), we have 
recalculated Eletrosilex's general and administrative expenses on the 
same basis as interest expense in order to be consistent with the 
interest expense calculation. See Analysis Memorandum on the Sixth 
Administrative Review of Silicon Metal from Brazil from Letitia Kress 
through James Doyle to the File dated July 30, 1998 (``Memorandum''), a 
public version of which is in the file in Central Records, Room B-099 
at the U.S. Department of Commerce.

LIASA

    As a result of verification, the Department recalculated LIASA's 
total cost of manufacture because at we found that certain sales of 
slag were incorrectly classified as off-grade silicon metal. See 
LIASA's Verification Report dated July 30, 1998 and LIASA's Analysis 
Memorandum dated July 30, 1998.

Minasligas

    We recalculated Minasligas's G&A expenses, using Minasligas's and 
Delp Engenharia Mecanica S.A. (Delp) 1996 G&A expenses and COGS as 
reported in Minasligas's November 21, 1997 submission. We recalculated 
G&A because it is Departmental practice to include both the parent 
(Delp) and subsidiary company (Minasligas) G&A expenses in its 
calculation of total G&A. See Minasligas's Analysis Memorandum.

RIMA

    The Department adjusted RIMA's G&A and interest expense 
calculations. In our original questionnaire of September 22, 1997, and 
supplemental questionnaire of March 31, 1998, we requested RIMA to 
compute its G&A expenses on an annual basis as a ratio of its total G&A 
expenses divided by its cost of goods sold. In both instances, RIMA did 
not calculate its G&A expenses using the methodology requested by the 
Department. Therefore, we have recalculated RIMA's G&A based on its 
1996 and 1997 financial statements, and Departmental practice of 
calculating G&A on total G&A expenses divided by cost of sales. See 
Analysis Memorandum on the Sixth Administrative Review of Silicon Metal 
from Brazil from Abdelali Elouaradia through James Doyle to the File 
dated July 30, 1998 (``Memorandum''), a public version of which is in 
the file in Central Records, Room B-099 at the U.S. Department of 
Commerce.
    Additionally, the Department has recalculated RIMA's interest 
expense. In our supplemental questionnaire of June 29, 1998, we 
requested RIMA to provide a breakout for 1996 and 1997 of their Income 
of Financial Investment by the type of investment. In its July 8, 1998 
supplemental response, RIMA stated that it did not have financial 
investments during this period. However, in its April 17, 1998 
supplemental response, RIMA applied certain accounts (i.e., Currency 
Adjustment, Asset Discounts, and Asset Interest) to offset its 
financial expenses in its calculation of interest expense. Although 
requested, RIMA has not provided the Department with an explanation why 
these accounts were included as offsets to its interest expense. 
Therefore, the Department has recalculated RIMA's interest expense 
based on RIMA's 1996 and 1997 financial statements without the offsets 
claimed by RIMA. See Analysis Memorandum on the of the Sixth 
Administrative Review of Silicon Metal from Brazil from Abdelali 
Elouaradia through James Doyle to the File dated July 30, 1998 
(``Memorandum''), a public version of which is in the file in

[[Page 42006]]

Central Records, Room B-099 at the U.S. Department of Commerce.

B. Test of Home Market Prices

    After calculating COP, we tested whether home market sales of 
silicon metal were made at prices below COP within an extended period 
of time in substantial quantities and whether such prices permitted the 
recovery of all costs within a reasonable period of time. We compared 
model-specific COP to the reported home market prices less any 
applicable movement charges and discounts, where appropriate.
    Pursuant to section 773(b)(2)(C) of the Act, where less than 20 
percent of each respondent's home market sales for a model were at 
prices less than the COP, we did not disregard any below-cost sales of 
that model because we determined that the below cost sales were not 
made within an extended period of time in ``substantial quantities.'' 
Where 20 percent or more of each respondent's home market sales of a 
given product during the POR were at prices less than the COP, we 
determined that such sales were made within an extended period of time 
in substantial quantities in accordance with section 773(b)(2) (C) of 
the Tariff Act. To determine whether such sales were at prices which 
would not permit the full recovery of all costs within a reasonable 
period of time, in accordance with section 773(b)(2)(D) of the Tariff 
Act, we compared home market prices to the weighted-average COP for the 
POR. When we found that below-cost sales had been made in ``substantial 
quantities'' and were not at prices which would permit recovery of all 
costs within a reasonable period of time, we disregarded these below-
cost sales in the preliminary results in accordance with section 
773(b)(1) of the Act.
    In these preliminary results, our cost tests for CBCC, Minasligas, 
and Rima indicated that less than twenty percent of the sales of 
subject merchandise were at prices below COP. We therefore retained all 
sales of subject merchandise in our analysis and used them in our 
determination of NV, where applicable.
    The results of our cost tests for Eletrosilex and LIASA indicated 
that, within an extended period of time (one year, in accordance with 
section 773(b)(2)(B) of the Act), more than twenty percent of the sales 
of all products of each company were at prices below COP. Thus these 
below-cost sales were in ``substantial quantities.'' In addition, these 
sales were at prices which would not permit the full recovery of all 
costs within a reasonable period of time. In accordance with section 
773(b)(1) of the Act, we disregarded the below-cost sales of subject 
merchandise for each of these two companies and used the remaining 
above-cost sales as the basis for determining each company's NV, where 
applicable.
    For all respondents in accordance with section 773(a)(4) of the 
Act, we used CV as the basis for NV when there were no usable sales of 
the foreign like product in the comparison market. We calculated CV in 
accordance with section 773(e) of the Act.

Constructed Value

    In accordance with section 773(e) of the Act, for CBCC, LIASA, and 
Rima, we calculated CV based on the sum of respondent's cost of 
materials and fabrication employed in producing the subject 
merchandise, selling, general and administrative expenses, and profit 
incurred and realized in connection with production and sale of the 
foreign like product, and U.S. packing costs. In accordance with 
section 773(e)(2)(A), we based SG&A and profit on the amounts incurred 
and realized by each respondent in connection with the production and 
sale of the foreign like product in the ordinary course of trade, for 
consumption in the foreign country. We used the costs of materials, 
fabrication, and SG&A as reported in the CV portion of respondent's 
questionnaire response.
    For Rima, we adjusted its general and administrative and interest 
expenses. See Analysis Memorandum on the Sixth Administrative Review of 
Silicon Metal from Brazil from Abdelali Elouaradia through James Doyle 
to the File dated July 30, 1998 (``Memorandum''), a public version of 
which is in the file in Central Records, Room B-099 at the U.S. 
Department of Commerce. Additionally, because Rima has recovered ICMS 
tax on material inputs used in the production of silicon metal for 
export, we have excluded such taxes in the calculation of constructed 
value. We used the U.S. packing costs as reported in the U.S. sales 
portion of respondent's questionnaire responses. We based selling 
expenses and profit on the information reported in the home market 
sales portion of respondent's questionnaire responses. See Certain 
Pasta from Italy; Notice of Preliminary Determination of Sales at Less 
Than Fair Value and Postponement of Final Determination, 61 FR 1344, 
1349 (January 19, 1996). For selling expenses, we used the weighted-
average home market selling expenses.
    For CBCC, we made adjustments to fixed overhead to reflect the 
correct depreciation expense, G&A expenses and interest expense. These 
adjustments reflect those made in CBCC's COP. See adjustments to CBCC's 
COP in ``Calculation of COP'' section above. Because CBCC did not 
recover ICMS tax on material inputs used in the production of silicon 
metal for export to the United States, we have included CBCC's ICMS tax 
in the calculation of constructed value. To the extent CBCC recovered 
ICMS taxes for sales in the home market during the POR, we have 
excluded such tax from the calculation of CV.
    For LIASA, because LIASA did not recover ICMS tax on material 
inputs used in the production of silicon metal for export to the United 
States we have included LIASA's ICMS tax in the calculation of 
constructed value. To the extent LIASA recovered ICMS taxes for sales 
in the home market during the POR, we have excluded such tax from the 
calculation of CV.
    For Eletrosilex, we included the cost of materials and fabrication, 
and G&A expenses in CV. We made adjustments to depreciation expenses, 
amortization expenses, electricity cost, general and administrative 
expenses, and financial expenses. These adjustments reflect those made 
in Eletrosilex's COP. See adjustments to Eletrosilex's COP in 
``Calculation of COP'' section above and Facts Available section below. 
In these preliminary results, since we found that Eletrosilex made no 
above-cost sales of the foreign like product in the comparison market, 
we were therefore unable to derive profit for use in the constructed 
value calculation using Eletrosilex's home market sales data. For this 
reason, in accordance with section 773(e)(2)(B)(ii) of the Act, we used 
the average of the actual amounts of selling expenses incurred, and 
profit realized, by CBCC, LIASA, Minasligas and Rima in connection with 
the production and sale of the foreign like product, in the ordinary 
course of trade, for consumption in the home market. Additionally, we 
have included Eletrosilex's ICMS tax balance in the calculation of 
constructed value because Eletrosilex failed to provide the Department 
complete information on its ICMS tax balance. See Facts Available 
Section below and Analysis Memorandum. In accordance with section 
773(2)(B)(i) of the Act, we based G&A expenses (including net interest 
expenses) on the amounts incurred by the respondent in connection with 
the production and sale, for consumption in the foreign country, of the 
same general category of products.

[[Page 42007]]

Use of Facts Available

Eletrosilex

    We preliminarily determine that the use of adverse facts available 
is appropriate with respect to certain aspects of Eletrosilex's 
submitted data in accordance with section 776(a)(2)(C) and section 
776(b) of the Act because we find that Eletrosilex failed to cooperate 
to the best of its ability in failing to comply with our requests for 
complete information. In two supplemental questionnaires issued by the 
Department, Eletrosilex failed to provide the requested information. 
See Memorandum to Robert S. LaRussa from Joseph A. Spetrini, July 20, 
1998 on file in the Central Records Unit, Room B-099 of the main 
Commerce Building.
    On June 29 and July 6, 1998, the Department issued supplemental 
questionnaires to Eletrosilex requesting additional information on its 
home market sales, U.S. sales, cost of production, constructed value, 
and ICMS taxes. See Departmental letters to Eletrosilex on those dates. 
Eletrosilex failed to respond to two supplemental questionnaires 
requesting clarification of specific sales and cost questions and the 
nature of Eletrosilex's ICMS taxes. We must therefore consider whether 
Eletrosilex's submitted response is usable under section 782(e) of the 
Act.
    Section 782(e) provides that the Department shall not decline to 
consider information that is submitted by an interested party and is 
necessary to the determination but does not meet the applicable 
requirements established by the Department if: (1) the information is 
submitted by the deadline established for its submission; (2) the 
information can be verified; (3) the information is not so incomplete 
that it cannot serve as a reliable basis for reaching the applicable 
determination; (4) the interested party has demonstrated that it acted 
to the best of its ability in providing the information and meeting the 
requirements established by the Department with respect to the 
information; and (5) the information can be used without undue 
difficulties.
    When examined in light of the requirements of section 782(e), the 
facts of this review demonstrate that while Eletrosilex data is 
incomplete for certain elements of the calculation, nevertheless the 
Department has enough data on the record to reasonably calculate a 
dumping margin. On this basis, we determine that it is appropriate to 
resort to partial facts available, based on Departmental adjustments to 
Eletrosilex's cost of production data.
    The Department finds that Eletrosilex did not act to the best of 
its ability to comply with requests for information. In the past, 
Eletrosilex has demonstrated an understanding for requests of 
additional information by the Department. In this review, Eletrosilex 
responded on April 10, 1998, to the Department's March 24, 1998 
supplemental questionnaire. However, its failure to provide responses 
to our other supplemental questionnaires (i.e., dated June 29 and July 
6, 1998) despite numerous opportunities to do so constitutes a failure 
to cooperate to the best of its ability with respect to our request for 
information. See Public Version of Memorandum to File from Robert 
Bolling, dated July 20, 1998. It is therefore appropriate, under 
section 776(b) of the Act, for the Department to use an adverse 
inference in applying facts available.
    Accordingly, based on facts available, we have determined to 
recalculate Eletrosilex's depreciation expenses, amortization expenses, 
electricity cost, and financial expenses. See Analysis Memorandum dated 
July 30, 1998.

Level of Trade

    In accordance with section 773(a)(7) of the Act, to the extent 
practicable, we determine NV based on sales in the comparison market at 
the same level of trade (LOT) as the EP or CEP transaction. The NV LOT 
is that of the starting price sales in the comparison market or, when 
NV is based on CV, that of the sales from which we derive selling, 
general and administrative (SG&A) expenses and profit. For EP sales, 
the U.S. LOT is also the level of the starting price sales, which is 
usually from exporter to importer. For CEP sales, it is the level of 
the constructed sale from the exporter to the importer.
    To determine whether NV sales are at a different LOT than EP or CEP 
sales, we examine the stages in the marketing process and selling 
functions along the chain of distribution between the producer and the 
unaffiliated customer. If the comparison-market sales are at a 
different LOT, and the difference affects price comparability, as 
manifested in a pattern of consistent price differences between the 
sales on which NV is based and comparison-market sales at the LOT of 
the export transaction, we make an LOT adjustment under section 
773(a)(7)(A) of the Act. Finally, for CEP sales, the NV level is more 
remote from the factory than the CEP level and there is no basis for 
determining whether the difference in the levels between NV and CEP 
affects price comparability, we adjusted NV under section 773(a)(7)(B) 
of the Act (the CEP Offset provision). See Notice of Final 
Determination of Sales at Less Than Fair Value: Certain Cut-to-Length 
Carbon Steel Plate from South Africa, 62 FR 61731 (November 19, 1997).
    To determine whether a LOT adjustment or CEP offset was warranted 
for all Brazilian respondents, we compared the EP sales to the HM sales 
in accordance with the principles discussed above. For purposes of our 
analysis, we examined information regarding the distribution systems in 
both the U.S. and Brazilian markets, including the selling functions, 
classes of customer, and selling expenses for each respondent.
    In the home market, all respondents sold the subject merchandise to 
one or more of the following three categories of customers: end-users, 
and trading companies. Regardless of the category of customer, all 
respondents' home market sales were manufactured to order and the 
merchandise was shipped directly from the factory to each type of 
customer. Their packing processes were also identical for all sales, 
and the selling expenses for the POR were comparable for all sales, 
regardless of the category of customer. Evidence on the record also 
demonstrates that respondents did not have formal policies for 
providing special payment terms, such as discounts, to different types 
of customers. Additionally, we found no differences in the selling 
activities performed for each respondent's U.S. sales in comparison to 
its home market sales. Thus, we have determine that the selling 
activities each respondent performed for its home market sales were the 
same for all home market sales, and that each respondent's home market 
sales were all made at a single LOT.
    All respondents reported only EP sales in the U.S. market. All U.S. 
sales were made to either U.S. end-users or traders, where each sale 
was manufactured to order, and the selling activities were comparable 
for all sales, regardless of the category of customer. Therefore, we 
have concluded that for each respondent a single LOT exists in the 
United States which is the same as the HM LOT. Therefore, no LOT 
adjustment is warranted in this review.

Currency Conversion

    For purposes of the preliminary results, we made currency 
conversions in accordance with section 773A of the Act based on the 
official exchange rates in effect on the dates of the U.S. sales as 
certified by the Federal Reserve Bank of New York.

Preliminary Results of Review

    As a result of our review, we preliminarily determine that the

[[Page 42008]]

following weighted-average dumping margins exist for the period July 1, 
1996 through June 30, 1997, to be as follows:

------------------------------------------------------------------------
                                                                Margin  
                   Manufacturer/exporter                      (percent) 
------------------------------------------------------------------------
CBCC.......................................................            0
Eletrosilex................................................        33.11
LIASA......................................................            0
Minasligas.................................................            0
RIMA.......................................................            0
------------------------------------------------------------------------

    Parties to the proceeding may request disclosure within five (5) 
days of the date of publication of this notice. Any interested party 
may request a hearing within ten (30) days of publication. Any hearing, 
if requested, will be held 44 days after the date of publication of 
this notice, or the first workday thereafter. Interested parties may 
submit case briefs within 30 days of the date of publication of this 
notice. Rebuttal briefs, which must be limited to issues raised in the 
case briefs, may be filed not later than 37 days after the date of 
publication. Parties who submit argument are requested to submit with 
the argument: (1) A statement of the issues and (2) a brief summary of 
the argument. The Department will publish a notice of final results of 
this administrative review, which will include the results of its 
analysis of issues raised in any such comments or at a hearing, within 
120 days of publication of these preliminary results.
    The Department shall determine, and the Customs Service shall 
assess, antidumping duties on all appropriate entries. Upon completion 
of this review, the Department will issue appraisement instructions 
directly to the Customs Service. The Department calculated the 
assessment of duties in accordance with section 351.212 of its 
regulations.
    Furthermore, the following deposit rates will be effective upon 
publication of the final results of this administrative review for all 
shipments of silicon metal from Brazil entered, or withdrawn from 
warehouse, for consumption on or after the publication date, as 
provided for by section 751(a)(1)(c) of the Act: (1) The cash deposit 
rate for the reviewed companies will be the rate established in the 
final results of this review (except that no deposit will be required 
for firms with zero or de minims margins, i.e., margins less than 0.5 
percent); (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 
less than fair value (LTFV) investigation, but the manufacturer is, the 
cash deposit rate will be the rate established for the most recent 
period for the manufacturer of the merchandise; and (4) for all other 
producers and/or exporters of this merchandise, the cash deposit rate 
shall be 91.06 percent, the all others rate established in the LTFV 
investigation, 56 FR 36135 (July 31, 1991).
    These deposit rates, when imposed, shall remain in effect until 
publication of the final results of the next administrative review.
    This notice also serves as a preliminary reminder to importers of 
their responsibility under 19 CFR 351.402(f)(2) 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 determination is issued and published in accordance with 
sections 751(a)(1) and 777(i)(1) of the Act.

    Dated: July 30, 1998.
Joseph A. Spetrini,
Acting Assistant Secretary for Import Administration.
[FR Doc. 98-21061 Filed 8-5-98; 8:45 am]
BILLING CODE 3510-DS-P