[Federal Register Volume 66, Number 218 (Friday, November 9, 2001)]
[Notices]
[Pages 56635-56639]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 01-28225]


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DEPARTMENT OF COMMERCE

International Trade Administration

[A-307-820]


Notice of Preliminary Determination of Sales at Less Than Fair 
Value; Silicomanganese From Venezuela

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

EFFECTIVE DATE: November 9, 2001.

FOR FURTHER INFORMATION CONTACT: Deborah Scott at (202) 482-2657 or 
Robert James at (202) 482-0649; Antidumping and Countervailing Duty 
Enforcement Group III, Import Administration, International Trade 
Administration, U.S. Department of Commerce, 14th Street and 
Constitution Avenue, NW., Washington, DC 20230.

The 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 Tariff Act) 
by the Uruguay Round Agreements Act (URAA). In addition, unless 
otherwise indicated, all citations to the Department of Commerce (the 
Department) regulations are to the regulations at 19 CFR part 351 
(April 2000).

Preliminary Determination

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

Case History

    On April 26, 2001 the Department initiated antidumping 
investigations of

[[Page 56636]]

silicomanganese from Kazakhstan, India, and Venezuela. See Initiation 
of Antidumping Duty Investigations: Silicomanganese from Kazakhstan, 
India, and Venezuela, 66 FR 22209 (May 3, 2001) (Initiation Notice). 
Since the initiation of these investigations the following events have 
occurred.
    In its initiation notice the Department set aside a period for all 
interested parties to raise issues regarding product coverage. See 
Initiation Notice at 22209. On May 17, 2001, we received comments from 
Eramet Marietta, Inc. and the Paper, Allied-Industrial, Chemical and 
Energy Workers International Union, Local 5-0639 (collectively, the 
petitioners).
    On May 9, 2001 the Department issued a letter to interested parties 
in all of the concurrent silicomanganese antidumping investigations, 
providing an opportunity to comment on the Department's proposed model 
matching characteristics and hierarchy. On May 16, 2001, petitioners 
submitted a letter suggesting certain modifications be made to the 
Department's proposed physical criteria which would be used for 
matching purposes.
    On May 21, 2001, the United States International Trade Commission 
(ITC) notified the Department that it preliminarily determined there is 
a reasonable indication that an industry in the United States is 
materially injured by reason of imports of the subject merchandise from 
India, Kazakhstan, and Venezuela. See Silicomanganese from India, 
Kazakhstan, and Venezuela, 66 FR 31258 (June 11, 2001).
    On May 23, 2001, the Department issued an antidumping questionnaire 
to Hornos Electricos de Venezuela, S.A. (HEVENSA), the sole producer/
exporter of subject merchandise in Venezuela. We requested that HEVENSA 
respond to section A (general information, corporate structure, sales 
practices, and merchandise produced), section B (home market or third-
country sales), section C (U.S. sales), section D (cost of production/
constructed value), and, if applicable, section E (cost of further 
manufacture or assembly performed in the United States).
    HEVENSA submitted its initial response to section A of the 
Department's questionnaire on June 13, 2001. We received respondent's 
response to sections B through D on July 23, 2001. Petitioners filed 
comments regarding section A and sections B through D of HEVENSA's 
response on July 10, 2001 and August 6, 2001, respectively. We issued 
supplemental questionnaires to respondent for section A on July 19, 
2001 and August 28, 2001 and for sections B through D on August 14, 
2001 and September 18, 2001. Respondent filed responses to our section 
A supplemental questionnaires on August 3, 2001 and September 7, 2001, 
and to our supplemental questionnaires for sections B through D on 
September 4, 2001 and October 3, 2001.

Period of Investigation

    The period of investigation (POI) is April 1, 2000 through March 
31, 2001. This period corresponds to the four most recent fiscal 
quarters prior to the month of the filing of the petition (i.e., April 
2001), and is in accordance with our regulations. See 19 CFR 
351.204(b)(1).

Scope of Investigation

    For purposes of these investigations, the products covered are all 
forms, sizes and compositions of silicomanganese, except low-carbon 
silicomanganese, including silicomanganese briquettes, fines and slag. 
Silicomanganese is a ferroalloy composed principally of manganese, 
silicon and iron, and normally contains much smaller proportions of 
minor elements, such as carbon, phosphorous and sulfur. Silicomanganese 
is sometimes referred to as ferrosilicon manganese. Silicomanganese is 
used primarily in steel production as a source of both silicon and 
manganese. Silicomanganese generally contains by weight not less than 4 
percent iron, more than 30 percent manganese, more than 8 percent 
silicon and not more than 3 percent phosphorous. Silicomanganese is 
properly classifiable under subheading 7202.30.0000 of the Harmonized 
Tariff Schedule of the United States (HTSUS). Some silicomanganese may 
also be classified under HTSUS subheading 7202.99.5040. This scope 
covers all silicomanganese, regardless of its tariff classification. 
Although the HTSUS subheadings are provided for convenience and U.S. 
Customs purposes, our written description of the scope remains 
dispositive.
    The low-carbon silicomanganese excluded from this scope is a 
ferroalloy with the following chemical specifications: minimum 55 
percent manganese, minimum 27 percent silicon, minimum 4 percent iron, 
maximum 0.10 percent phosphorus, maximum 0.10 percent carbon and 
maximum 0.05 percent sulfur. Low-carbon silicomanganese is used in the 
manufacture of stainless steel and special carbon steel grades, such as 
motor lamination grade steel, requiring a very low carbon content. It 
is sometimes referred to as ferromanganese-silicon. Low-carbon 
silicomanganese is classifiable under HTSUS subheading 7202.30.0000.

Product Comparisons

    Pursuant to section 771(16) of the Tariff Act, all products 
produced by the respondent within the scope of the investigation, 
above, and sold in the comparison market during the POI, are considered 
to be foreign like products. To match U.S. sales of subject merchandise 
to comparison-market sales of the foreign like product, we relied on 
two physical characteristics--grade and size. During the POI HEVENSA 
sold only one product in both the home market and United States. Since 
the product sold in both markets was identical, no matches of similar 
merchandise were utilized in our calculations.

Fair Value Comparisons

    To determine whether sales of slicomanganese from Venezuela were 
made in the United States at less than fair value, we compared export 
price (EP) to normal value (NV), as described in the ``Export Price'' 
and ``Normal Value'' sections of this notice. In accordance with 
section 777A(d)(1)(A)(i) of the Tariff Act, we calculated weighted-
average EPs for comparison to weighted-average NVs.

Transactions Reviewed

    For its home market sales, HEVENSA reported the date of invoice as 
the date of sale for some sales, and the date of purchase order or 
contract as the date of sale for other sales. In keeping with the 
Department's preference for using a uniform date of sale under section 
19 CFR 351.401(i), we have preliminarily determined that invoice date 
best represents the date on which the essential terms of sale are set. 
Based on an analysis of HEVENSA's home market sales data, we noted that 
HEVENSA made changes in the essential terms of sale between the 
contract date and the invoice date for a significant percentage of its 
sales. See, e.g., Appendix A-15 of HEVENSA's August 3, 2001 submission 
and Appendix Sup B-1 of its September 4, 2001 submission. Therefore, 
for this preliminary determination we have used the date of invoice as 
the date of sale for all of HEVENSA's home market sales.
    For all U.S. sales, HEVENSA reported the date of the customer's 
purchase order as the date of sale. However, since the record does not 
provide ample evidence to allow us to determine that the essential 
terms of sale are set on this date, we have considered the invoice

[[Page 56637]]

date to be the date of sale for HEVENSA's U.S. sales for this 
preliminary determination. We intend to examine at verification whether 
differences in the essential terms of sale exist between the purchase 
order date and invoice date. See Preamble to the Final Regulations, 62 
FR 27296, 27348-50 (May 19, 1997).

Export Price

    HEVENSA reported as export price (EP) transactions sales of subject 
merchandise sold to unaffiliated U.S. customers prior to 
importation.See HEVENSA's June 13, 2001 response at page 4 and Exhibit 
A-9. We calculated EP in accordance with section 772(a) of the Tariff 
Act because the merchandise was sold to the first unaffiliated 
purchaser in the United States prior to importation and the constructed 
export price (CEP) methodology was not otherwise warranted, based on 
the facts of record. We based EP on the FOB price to unaffiliated 
purchasers in the United States. We made deductions for movement 
expenses in accordance with section 772(c)(2)(A) of the Tariff Act; 
these included, where appropriate, foreign inland freight and foreign 
brokerage and handling charges. We did not accept HEVENSA's claim for a 
duty drawback adjustment; see the November 2, 2001 preliminary 
determination analysis memorandum (``Preliminary Analysis Memorandum'') 
on file in Import Administration's Central Records Unit, Room B-099 of 
the main Commerce building.

Level of Trade

    In accordance with section 773(a)(1)(B)(i) of the Tariff 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, the U.S. LOT is also the level of the starting price 
sale, which is usually from the exporter to the importer. For CEP, 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 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 a LOT adjustment under section 
773(a)(7)(A) of the Tariff Act. Finally, for CEP sales, if the NV level 
is more remote from the factory than the CEP level and there is no 
basis for determining whether the differences in the levels between NV 
and CEP affect price comparability, we adjust NV under section 
773(A)(7)(B) of the Tariff Act (the CEP offset provision). See, e.g., 
Certain Carbon Steel Plate from South Africa, Final Determination of 
Sales at Less Than Fair Value, 62 FR 61731 (November 19, 1997).
    In implementing these principles in this investigation, we obtained 
information from HEVENSA about the marketing stages involved in its 
reported U.S. and home market sales, including a description of the 
selling activities performed by HEVENSA for each channel of 
distribution.
    In the home market HEVENSA reported two channels of distribution--
sales to end users, and sales to a trading company. See HEVENSA's June 
13, 2001 response at page 3. For both channels of distribution in the 
home market, HEVENSA performed similar selling functions, including 
sales logistics and inventory maintenance. See, e.g., HEVENSA's June 
13, 2001 questionnaire response at 3 and its July 23, 2001 
questionnaire response at 2-4. Because channels of distribution do not 
qualify as separate levels of trade when the selling functions 
performed for each channel are sufficiently similar, we have determined 
that one LOT exists for HEVENSA's home market sales.
    In the United States, HEVENSA reported one channel of distribution 
for sales of subject merchandise during the POI (EP sales made directly 
to an unaffiliated reseller who then resold silicomanganese to its own 
customers). For its U.S. sales HEVENSA performed selling functions such 
as sales logistics. HEVENSA did not claim that its sales to home market 
customers were at a different LOT than its sales to U.S. customers and, 
therefore, did not claim a LOT adjustment. Based on the information 
provided by HEVENSA, we preliminarily determine that one LOT exists in 
the United States and that the U.S. LOT is comparable to the home 
market LOT.

Facts Available

    In accordance with section 776(a)(1) of the Tariff Act, in this 
preliminary determination we find it necessary to use partial facts 
available where certain information needed to conduct our analysis is 
not available on the record. In its original and supplemental 
questionnaire responses, HEVENSA reported that it is owned by three 
holding companies. See, e.g., HEVENSA's August 3, 2001 submission at 2-
3. While HEVENSA stated that ``[t]he three holding companies are 
limited strictly to holding shares in HEVENSA, and do not perform any 
business for HEVENSA,'' HEVENSA indicated in its questionnaire 
responses that these companies performed certain activities on its 
behalf during the POI. These activities included, among others, 
collection of payments from customers, payments to suppliers of inputs, 
and lending transactions. See, e.g., Appendix A-6 of HEVENSA's June 13, 
2001 submission (audited financial statement for fiscal years 1999 and 
2000; specifically, see note 8 on page 9); see also HEVENSA's August 3, 
2001 submission at 4 and its September 7, 2001 submission at 1.
    Despite repeated requests, HEVENSA did not provide any financial 
statements or other relevant documents that would allow us to quantify 
the general and administrative (G&A) and financial expenses incurred by 
the three holding companies in conducting these activities on HEVENSA's 
behalf. Such information is necessary to calculate accurately a 
respondent's cost of production (COP). In its September 7, 2001 
response to the Department's second section A supplemental 
questionnaire, HEVENSA stated that it could not provide copies of the 
holding companies' audited financial statements because no such 
financial statements were available. We intend to investigate fully at 
verification the existence of any financial statements or other 
relevant documents for the three holding companies. Further, we intend 
to investigate the exact nature of all activities performed by 
HEVENSA's parent companies on its behalf, as well as the extent to 
which these activities are conducted. Because we do not have the 
information necessary to include a portion of the parents' financial 
and G&A expenses in HEVENSA's COP in making our preliminary 
determination, we have found that, pursuant to section 776(a) of the 
Tariff Act, it is appropriate to use the facts otherwise available in 
calculating COP. Section 776(a) of the Tariff Act provides that the 
Department will, subject to section 782(d), use the facts otherwise 
available in reaching a determination if ``necessary information is not 
available on the record.'' Therefore, for this preliminary 
determination, we have used the G&A and financial expense ratios 
contained in the petition for Siderurgica

[[Page 56638]]

Venezolana SIVENSA, S.A. (SIVENSA), a Venezuelan steel producer, in 
calculating HEVENSA's COP.

Normal Value

Home Market 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 was equal to or greater than five percent of the aggregate 
volume of U.S. sales), we compared HEVENSA's volume of home market 
sales of the foreign like product to the volume of U.S. sales of the 
subject merchandise, in accordance with section 773(a)(1)(C) of the 
Tariff Act. As HEVENSA's aggregate volume of home market sales of the 
foreign like product was greater than five percent of its aggregate 
volume of U.S. sales of the subject merchandise, we determined that the 
home market was viable. Therefore, we have based NV on home market 
sales in the usual commercial quantities and in the ordinary course of 
trade.

Cost of Production Analysis

    Based on allegations contained in the petition, and in accordance 
with section 773(b)(2)(A)(i) of the Tariff Act, we found reasonable 
grounds to believe or suspect that sales of silicomanganese from 
Venezuela were made at prices below COP. As a result, the Department 
has initiated an investigation to determine whether HEVENSA made home 
market sales during the POI at prices below its respective COP, within 
the meaning of section 773(b) of the Tariff Act. We conducted the COP 
analysis described below.
A. Calculation of COP
    In accordance with section 773(b)(3) of the Tariff Act, we 
calculated COP based on the sum of HEVENSA's cost of materials and 
fabrication for the foreign like product and added an amount for home 
market G&A and interest expenses. We relied on the COP information 
provided by HEVENSA in its original and supplemental responses, except 
as noted below.
    1. We disallowed the adjustment HEVENSA made to its fixed overhead 
costs for a transformer accident that occurred during the POI. For our 
recalculation of fixed overhead costs and further discussion of this 
issue, see the Preliminary Analysis Memorandum.
    2. As discussed in the ``Facts Available'' section above, we based 
HEVENSA's G&A and financial expense ratios on the facts available.
B. Test of Home-Market Sales Prices
    We compared the adjusted weighted-average COP for HEVENSA to the 
home market sales of the foreign like product, as required under 
section 773(b) of the Tariff Act, in order to determine whether these 
sales had been made at prices below the COP within an extended period 
of time (i.e., a period of one year) in substantial quantities and 
whether such prices were sufficient to permit the recovery of all costs 
within a reasonable period of time. In accordance with section 
773(b)(2)(C)(i) of the Tariff Act, we determined that sales made below 
the COP were made in substantial quantities if the volume of such sales 
represented 20 percent or more of the volume of sales under 
consideration for the determination of normal value.
    On a model-specific basis, we compared the revised COP to the home 
market prices, less any applicable movement charges and other direct 
and indirect selling expenses.
C. Results of the COP Test
    Pursuant to section 773(b)(2)(C) of the Tariff Act, where less than 
20 percent of a respondent's sales of a given product were at prices 
less than the COP, we did not disregard any below-cost sales of that 
product because we determined that the below-cost sales were not made 
in ``substantial quantities.'' Where 20 percent or more of a 
respondent's sales of a given product during the POI were at prices 
less than the COP, we determined such sales to have been made in 
``substantial quantities'' within an extended period of time in 
accordance with section 773(b)(2)(B) or the Tariff Act. In such cases, 
because we compared prices to POI-average costs, we also determined 
that such sales were not made at prices which would permit recovery of 
all costs within a reasonable period of time, in accordance with 
section 773(b)(2)(D) of the Tariff Act. Therefore, we disregarded the 
below-cost sales.
    We found that for the single model of silicomanganese sold in the 
home market, more than 20 percent of HEVENSA's home market sales within 
an extended period of time were made at prices less than the COP. 
Further, the prices did not provide for the recovery of costs within a 
reasonable period of time. We therefore disregarded these below-cost 
sales and used the remaining sales as the basis for determining NV, in 
accordance with section 773(b)(1) of the Tariff Act. Since all U.S. 
sales of silicomanganese were of a model identical to that sold in the 
home market, we did not have to compare EP to constructed value (CV) in 
accordance with section 773(a)(4) of the Tariff Act.
Price-to-Price Comparisons
    We calculated NV based on the FOB or delivered prices to 
unaffiliated customers. We made deductions, where appropriate, from the 
starting price for inland freight. In addition, we made adjustments 
under section 773(a)(6)(C)(iii) of the Tariff Act for differences in 
circumstances of sale for imputed credit expenses. However, we did not 
rely on HEVENSA's reported home market and U.S. credit expenses but 
rather recalculated them using the average short-term lending rates 
calculated by the Federal Reserve. (For a detailed description of the 
methodology used to recalculate imputed credit expenses, see the 
Preliminary Analysis Memorandum). We did not make any deductions for 
home market packing costs or add U.S. packing costs to NV as the 
respondent reported that it incurred no such expenses in selling 
silicomanganese in either market.

Currency Conversions

    We made currency conversions into U.S. dollars in accordance with 
section 773A(a) of the Tariff Act based on the exchange rates in effect 
on the dates of the U.S. sales, as certified by the Federal Reserve 
Bank.

Verification

    Pursuant to section 782(i) of the Tariff Act, we intend to verify 
all information relied upon in making our final determination.

Suspension of Liquidation

    In accordance with section 733(d)(2) of the Tariff Act, we are 
directing the Customs Service to suspend liquidation of all entries of 
silicomanganese from Venezuela that are entered, or withdrawn from 
warehouse, for consumption on or after the date of publication of this 
notice in the Federal Register. We will instruct the Customs Service to 
require a cash deposit or the posting of a bond equal to the weighted-
average amount by which the NV exceeds the EP, as indicated in the 
chart below. These suspension-of-liquidation instructions will remain 
in effect until further notice. The weighted-average dumping margins 
are as follows:

------------------------------------------------------------------------
                                                              Weighted-
                                                               average
                   Exporter/manufacturer                        margin
                                                              percentage
------------------------------------------------------------------------
Hornos Electricos de Venezuela.............................        53.47
All Others.................................................        53.47
------------------------------------------------------------------------


[[Page 56639]]

ITC Notification

    In accordance with section 733(f) of the Tariff Act, we have 
notified the ITC of our determination. If our final antidumping 
determination is affirmative, the ITC will determine whether these 
imports are materially injuring, or threaten material injury to, the 
U.S. industry.
    The deadline for that ITC determination would be the later of 120 
days after the date of this preliminary determination or 45 days after 
the date of our final determinations.

Public Comment

    Case briefs or other written comments in at least six copies must 
be submitted to the Assistant Secretary for Import Administration no 
later than fifty days after the date of publication of this notice, and 
rebuttal briefs, limited to issues raised in case briefs, no later than 
fifty-five days after the date of publication of this preliminary 
determination. A list of authorities used and an executive summary of 
issues should accompany any briefs submitted to the Department. Such 
summary should be limited to five pages total, including footnotes. 
Further, we would appreciate it if parties submitting written comments 
would provide the Department with an additional copy of the public 
version of any such comments on diskette. In accordance with section 
774 of the Tariff Act, we will hold a public hearing, if requested, to 
afford interested parties an opportunity to comment on arguments raised 
in case or rebuttal briefs. Tentatively, any hearing will be held 
fifty-seven days after publication of this notice, time and room to be 
determined, at the U.S. Department of Commerce, 14th Street and 
Constitution Avenue, N.W., Washington, D.C. 20230. Parties should 
confirm by telephone the time, date, and place of the hearing 48 hours 
before the scheduled time.
    Interested parties who wish to request a hearing, or to participate 
if one is requested, must submit a written request to the Assistant 
Secretary for Import Administration, U.S. Department of Commerce, Room 
1870, within 30 days of the publication of this notice. Requests should 
contain: (1) The party's name, address, and telephone number; (2) the 
number of participants; and (3) a list of the issues to be discussed. 
Oral presentations will be limited to issues raised in the case and 
rebuttal briefs. If this investigation proceeds normally, we will make 
our final determination no later than 75 days after the date of this 
preliminary determination.
    This determination is published pursuant to sections 733(f) and 
777(i)(1) of the Tariff Act.

    Dated: November 2, 2001.
Faryar Shirzad,
Assistant Secretary, Import Administration.
[FR Doc. 01-28225 Filed 11-8-01; 8:45 am]
BILLING CODE 3510-DS-P