[Federal Register Volume 62, Number 153 (Friday, August 8, 1997)]
[Notices]
[Pages 42759-42763]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 97-20935]


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DEPARTMENT OF COMMERCE

International Trade Administration
[A-351-806]


Silicon Metal From Brazil; Preliminary Results of Antidumping 
Duty Administrative Review and Intent Not To Revoke in Part

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

ACTION: Notice of preliminary results of the antidumping duty 
administrative review and intent not to revoke in part.

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SUMMARY: The Department of Commerce (the Department) is conducting an 
administrative review of the antidumping duty order on silicon metal 
from Brazil in response to requests by respondents Eletrosilex Belo 
Horizonte (Eletrosilex), Companhia Ferroligas Minas Gerais--Minasligas 
(Minasligas), Companhia Brasileira Carbureto de Calcio (CBCC), RIMA 
Industrial S/A (RIMA), and Wabash Alloys, a division of Connell Limited 
Partnership, an interested party which imported silicon metal during 
the period of review. This review covers the period July 1, 1995, 
through June 30, 1996.
    We preliminarily determine not to revoke the order with respect to 
CBCC or Minasligas. These companies submitted timely requests for 
revocation in this review, however, in the final results of the 
preceding administrative review of this order the Department determined 
that both companies had dumping margins greater than de minimis. 
Accordingly, these companies have not met the requirements of 19 CFR 
353.25 (i.e., three consecutive years with zero or de minimis dumping 
margins) and therefore do not qualify for revocation under the 
Department's regulations.
    We preliminarily determine that sales have been made at less than 
normal value (NV) during the POR by Eletrosilex and Rima. If these 
preliminary results are adopted in our final results of administrative 
review, we will instruct the U.S. Customs Service to assess ad-valorem 
antidumping duties equal to the difference between export price (EP) 
and NV. Interested parties are invited to comment on these preliminary 
results. Parties who submit comments are requested to submit with the 
argument: (1) A statement of the issue; and (2) a brief summary of the 
argument.

EFFECTIVE DATE: August 8, 1997.

FOR FURTHER INFORMATION CONTACT: Alexander Braier, Yury Beyzarov, 
Sharon Harris, Sinem Sonmez, or James C. Doyle, 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 Tariff Act of 
1930, as amended (the Act) are to the provisions effective January 1, 
1995, the effective date of the amendments made to the Tariff Act by 
the Uruguay Round Agreements Act (URAA). In addition, unless otherwise 
indicated, all citations to the Department's regulations are to the 
regulations, as codified at 19 CFR part 353 (1996).

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 8, 1996, the Department published a ``Notice of Opportunity to 
Request Administrative Review'' on silicon metal from Brazil in the 
Federal Register for the period July 1, 1995, through June 30, 1996 (61 
FR 35712).
    In accordance with 19 CFR 353.22(a)(1), Eletrosilex, Minasligas, 
CBCC, and RIMA requested that the Department conduct an administrative 
review of their respective sales. Pursuant to 19 CFR 353.25, Minasligas 
and CBCC also requested revocation of the antidumping duty order in 
part. On August 15, 1995, the Department published in the Federal 
Register a notice of initiation of this antidumping duty administrative 
review (61 FR 42416). On March 7, 1997, the Department published in the 
Federal Register its notice extending the deadline in these preliminary 
results until May 14, 1997 (62 FR 10540). Due to the complicated issues 
in this case, the Department again extended the deadline for these 
preliminary results until July 31,1997 (62 FR 27235).

Verification

    From March 17 through March 22, 1997, in accordance with section 
782(i) of the Act, we verified information provided by Minasligas and 
Rima using standard verification procedures including examination of 
relevant sales and financial records, and selection of original source 
documentation containing relevant information. Our verification results 
are outlined in the respective verification reports, the public 
versions of which are available in the Central Records Unit of the 
Department of Commerce, room B-099.

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.

[[Page 42760]]

Level of Trade

    To the extent practicable, we determine NV for sales at the same 
level of trade as the U.S. sales (either export price (EP) or 
constructed export price (CEP)). When there are no sales at the same 
level of trade, we compare U.S. sales to home market (or, if 
appropriate, third-country) sales at a different level-of-trade. The NV 
level of trade is that of the starting-price sales in the home market. 
When NV is based on CV, the level of trade is that of the sales from 
which we derive selling, general, and administrative expenses (SG&A) 
and profit.
    For both EP and CEP, the relevant transaction for the level of 
trade analysis is the sale (or constructed sale) from the exporter to 
the importer. While the starting price for CEP is that of a subsequent 
resale to an unaffiliated buyer, the construction of the CEP results in 
a price that would have been charged if the importer had not been 
affiliated. We calculate the CEP by removing from the first resale to 
an independent U.S. customer the expenses under section 772(d) of the 
Act and the profit associated with these expenses. These expenses 
represent activities undertaken by the affiliated importer. Because the 
expenses deducted under section 772(d) represent selling activities in 
the United States, the deduction of these expenses normally yields a 
different level of trade for the CEP than for the later resale (which 
we use for the starting price). Movement charges, duties and taxes 
deducted under section 772(c) do not represent activities of the 
affiliated importer, and we do not remove them to obtain the CEP level 
of trade.
    To determine whether home market sales are at a different level of 
trade than U.S. sales, we examine whether the home market sales are at 
different stages in the marketing process than the U.S. sales. The 
marketing process in both markets begins with goods being sold by the 
producer and extends to the sale to the final user, regardless of 
whether the final user is an individual consumer or an industrial user. 
The chain of distribution between the producer and the final user may 
have many or few links, and each respondent's sales occur somewhere 
along this chain. In the United States, the respondent's sales are 
generally to an importer, whether independent or affiliated. We review 
and compare the distribution systems in the home market and U.S. export 
markets, including selling functions, class of customer, and the extent 
and level of selling expenses for each claimed level of trade. Customer 
categories such as distributor, original equipment manufacturer (OEM), 
or wholesaler are commonly used by respondents to describe levels of 
trade, but, without substantiation, they are insufficient to establish 
that a claimed level of trade is valid. An analysis of the chain of 
distribution and of the selling functions substantiates or invalidates 
the claimed levels of trade. Different levels of trade necessarily 
involve differences in selling functions, but differences in selling 
functions, even substantial ones, are not alone sufficient to establish 
a difference in the levels of trade. Different levels of trade are 
characterized by purchasers at different stages in the chain of 
distribution and sellers performing qualitatively or quantitatively 
different functions in selling to them.
    When we compare U.S. sales to home market sales at a different 
level of trade, we make a level-of-trade adjustment if the difference 
in levels of trade affects price comparability. We determine any effect 
on price comparability by examining sales at different levels of trade 
in a single market, the home market. Any price effect must be 
manifested in a pattern of consistent price differences between home 
market sales used for comparison and sales at the equivalent level of 
trade of the export transaction. To quantify the price differences, we 
calculate the difference in the average of the net prices of the same 
models sold at different levels of trade. We use the average difference 
in net prices to adjust NV when NV is based on a level of trade 
different from that of the export sale. If there is a pattern of no 
consistent price differences, the difference in levels of trade does 
not have a price effect and, therefore, no adjustment is necessary.
    The statute also provides for an adjustment to NV when NV is based 
on a level of trade different from that of the CEP if the NV level is 
more remote from the factory than the CEP and if we are unable to 
determine whether the difference in levels of trade between CEP level 
and NV level affects the comparability of their prices. This latter 
situation can occur where there is no home market level of trade 
equivalent to the U.S. sales level or where there is an equivalent home 
market level but the data are insufficient to support a conclusion on 
price effect. This adjustment, the CEP offset, is identified in section 
773(7)(B) of the Act and is the lower of the following:
    <bullet> The indirect selling expenses on the home market sale, or
    <bullet> The indirect selling expenses deducted from the starting 
price used to calculate CEP.

The CEP offset is not automatic each time we use CEP. The CEP offset is 
made only when the level of trade of the home market sale is more 
advanced than the level of trade of the U.S. (CEP) sale and there is 
not an appropriate basis for determining whether there is an effect on 
price comparability.
    In the present review, none of the respondents requested a level of 
trade (LOT) adjustment. To ensure that no such adjustment was 
necessary, in accordance with the principles discussed above, we 
examined information regarding the distribution systems in both the 
United States and Brazilian markets, including the selling functions, 
classes of customer, and selling expenses for each respondent.
    In the home market, all companies sold merchandise to one or more 
of the following three categories of customers: end-users, traders, and 
commissioned agents. Regardless of the category of customer, all the 
companies' home market (HM) sales were manufactured to order and the 
merchandise was shipped directly from the factory to each type of 
customer. The companies' 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 the companies did not have formal policies for 
providing special payment terms, such as discounts, to different types 
of customers. Based upon this evidence, we 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 HM sales 
were all made at a single LOT.
    All four companies' sales in the United States were EP sales. All 
of the companies' U.S. customers were end-users or traders, each sale 
was manufactured to order, and the selling expenses were comparable for 
all sales, regardless of the category of customer. Furthermore, the 
packing processes were almost identical to that of the HM sales, and we 
found no differences in the selling activities performed for each 
respondent's U.S. sales in comparison to their HM sales. Based on this, 
for each respondent, we conclude that a single level of trade exists in 
the United States which is the same as the HM LOT. As a result, a LOT 
adjustment is not warranted in this review.

Product Comparisons

    To determine whether sales of silicon metal by CBCC, Eletrosilex, 
Minasligas, and Rima to the U.S. were made at less than normal value, 
we compared the ``Export Price'' to the ``Normal Value'',

[[Page 42761]]

as described in the ``Export Price'' and ``Normal Value'' sections of 
this notice. In accordance with section 777A(d)(2) of the Act, we 
compared the EP of individual transactions to the monthly weighted-
average NV of contemporaneous sales of the foreign like product.

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, 
we compared each respondent'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 Act. 
Because each respondent'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 for the subject merchandise, we determined that 
the home market provides a viable basis for calculating NV for each 
respondent.

B. Home Market Sales

    We compared the EP of individual transactions to the monthly 
weighted-average NV of sales of the foreign like product, pursuant to 
section 777A(d)(2) of the Act. In such cases we based NV on packed, ex-
factory or delivered prices to unaffiliated purchasers in the home 
market. Where applicable, we made adjustments to home market price for 
inland freight, inland freight insurance, and interest revenue. We 
reduced home market prices by an amount for home market credit and 
packing expenses, and we increased it by U.S. credit expenses and U.S. 
packing costs, in accordance with sections 773(a)(6)(A) and (B) of the 
Act. We also increased NV, where appropriate, for bank charges, U.S. 
advertising, and warehousing expenses incurred on U.S. sales, in 
accordance with sections 773(a)(6)(A) and (B) of the Act. We decreased 
NV, where appropriate, by the amount of commissions paid in the home 
market, but limited this amount to the amount of indirect selling 
expenses incurred on U.S. sales, in accordance with 19 CFR 
353.56(b)(1).
    As respondents did not provide sufficient information regarding the 
interest rates used in the calculation of home market credit, we used 
the simple average of monthly Government of Brazil Taxa Referencial 
(TR) rates for the POR. The TR rate is the published Government of 
Brazil prime lending rate. We disallowed Minasligas' claimed imputed 
U.S. credit revenue because the Department's practice is to allow 
imputed credit revenue only in situations where advance payment is made 
by the customer before the merchandise is shipped. See, e.g., Fresh Cut 
Flowers from Mexico, Final Results of Antidumping Duty Administrative 
Review (61 FR 40604). However, the customer does not pay until after it 
receives the merchandise. Therefore, applying the Department's standard 
imputed credit calculation would result in imputed U.S. credit expense, 
not revenue. However, consistent with the Department's practice, 
because all companies used Advance Exchange Contract's (ACC's) to 
finance export sales, and ACC's are dollar-denominated short-term 
loans, we used ACC rates to determine the interest rate used in the 
U.S. imputed credit calculation. To calculate each company's U.S. 
imputed credit interest rate, we used the simple average of their ACC 
interest rates.

United States Price (USP)

A. Export Price

    In calculating USP we used export price (EP) for each respondent, 
as defined in section 772(a) of the Act, because the subject 
merchandise was first sold to unrelated purchasers prior to the date of 
importation into the United States and the use of constructed export 
price was not indicated by the facts on the record.
    We based EP on the packed, delivered price to the first 
unaffiliated purchasers in the United States, or to unaffiliated 
trading companies who sell the subject merchandise in the United 
States. In accordance with Section 772(c)(2) of the Act, we reduced 
this price, where appropriate, for foreign inland freight, 
international freight, marine insurance, weighing and sampling charges, 
port clerical expenses, and brokerage and handling. We made an addition 
to USP, where appropriate, for duty drawback in accordance with section 
772(c) of the Act. No other adjustments to company provided information 
were made except in the following instances:
    1. For the imputed U.S. credit calculation for CBCC, Eletrosilex, 
and Minasligas, we used an interest rate which was the simple average 
of the ACC rates used during the POR, as reported by each respondent.
    2. 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 U.S. 
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.
    3. For all companies, we used as the payment date the date the bank 
received payment from the U.S. customer.
    4. For Eletrosilex, we used the date of shipment from the factory 
as the date of shipment.
    5. For Eletrosilex, we reallocated indirect selling expenses using 
the methodology we used in the previous reviews of this case (see the 
Department's calculation memo of January 24, 1997).
    6. For Minasligas, we used as the date of shipment the date of 
invoice, because that is the date of the first shipment from the 
factory pursuant to a sale.

Cost of Production Analysis

    In prior segments of this proceeding, we disregarded home market 
sales found to be below the cost of production (COP) for CBCC, 
Eletrosilex, 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 below the COP may have occurred during 
the review period for these companies and has conducted a COP 
investigation for these respondents. In addition, on January 28, 1997, 
we initiated a below-cost investigation for Minasligas pursuant to an 
allegation from petitioners on December 11, 1996.

A. Calculation of COP

    In accordance with 773(b)(3) of the 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 home market selling, 
general, and administrative expenses (SG&A) and the cost of all 
expenses incidental to placing the foreign like product in condition 
packed and ready for shipment. We relied on the home market sales data 
and COP information provided by each respondent, except in the 
following specific instances where the reported costs were determined 
to be improperly valued:
    1. For Minasligas, we made an offset to the total cost of 
production (totcop) to account for the revenue received from the sale 
of by-products.
    2. For Minasligas, we set interest expense equal to zero because 
financial income exceeded financial expenses for Minasligas and its 
parent company, Delp Engenharia Mechanica, S.A.
    3. For Minasligas, we computed G&A by multiplying the tax-exclusive 
Cost of Manufacturing (COM) by the ratio of the combined G&A expenses 
for Minasligas and its parent company to the two

[[Page 42762]]

companies' combined cost of goods sold.
    4. For Eletrosilex, we recalculated total cost of manufacturing 
(totcom) to account for the revenue received from the sale of by-
products.
    5. For Rima, in the calculation of interest expense, we reallocated 
financial revenues to the ``net interest expense'' reported on Rima's 
1995 financial statements. We also added the increase in deferred 
financial expenses shown on the 1995 financial statements, and the 
amortization of the 1994 remaining balance of deferred financial 
expenses, to the ``net interest expense''.
    6. For Rima, in order to be consistent with the interest expense 
calculation, we based G&A expenses on Rima's 1995 financial statements, 
rather than its 1996 financial statements.
    7. For Rima, we allocated an amount to G&A based on the difference 
between the depreciated asset values from the depreciation calculation 
worksheets for 1995, and the total asset values for 1995 as indicated 
on Rima's financial statements. We also added to G&A the amortization 
of the 1994 remaining balance of deferred assets.

B. Test of Home Market Prices

    After calculating COP for each respondent, we tested whether home 
market sales of subject merchandise were made at prices below COP 
within an extended period of time and 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 
post-sale price adjustments, where appropriate.
    Pursuant to section 773(b)(2)(C) of the Act, where less than twenty 
percent of a respondent's home market sales of a given model are at 
prices less than COP, we do not disregard any below-cost sales of that 
product because we determine that the below-cost sales were not made 
within an extended period of time ``in substantial quantities.'' Where 
twenty percent or more of a respondent's home market sales of a given 
product are at prices less than the COP, we disregard the below-cost 
sales because we determine that the below-cost sales were made within 
an extended period of time in ``substantial quantities,'' in accordance 
with section 773(b)(2)(C) of the Act. To determine whether such sales 
are 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 Act, we compare home market prices to the weighted-
average model-specific COPs for the POR.
    In these preliminary results, our cost tests for CBCC and 
Minasligas 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 Rima 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 Eletrosilex and Rima, 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.
    For Eletrosilex and Rima, we included the cost of materials and 
fabrication, and G&A expenses in CV. In these preliminary results, we 
found that Eletrosilex and Rima made no above-cost sales of the foreign 
like product in the comparison market. Therefore, for these companies, 
we were unable to derive profit for use in the constructed value 
calculation using the companies' 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 and Minasligas in connection with the 
production and sale of the foreign like product, in the ordinary course 
of trade, for consumption in the home market. 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. Where appropriate, 
we made adjustments to CV, in accordance with section 773(a)(8) of the 
Act and section 353.56(a) of the Department's regulations, for 
circumstances of sale (COS) differences. For comparisons to EP, we made 
COS adjustments by deducting home market direct selling expenses and 
adding U.S. direct selling expenses.

Price Comparisons

    Where there were contemporaneous sales of the comparison product 
that passed the COP test, we based NV on home market prices.
    Where we compared export prices to CV, we deducted from CV the 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)(iii) of the Act.

Preliminary Results of Review

    As a result of our comparison of EP and NV, we preliminarily 
determine that the following weighted-average dumping margins exist for 
the period July 1, 1995 through June 30, 1996:

------------------------------------------------------------------------
                                                                Margin  
                   Manufacturer/exporter                      (percent) 
------------------------------------------------------------------------
CBCC.......................................................          0.0
Minasligas.................................................         1.93
Eletrosilex................................................        36.74
RIMA.......................................................        70.02
------------------------------------------------------------------------

    Parties to the proceeding may request disclosure within 5 days of 
the date of publication of this notice. Any interested party may 
request a hearing within 10 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.
    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

[[Page 42763]]

warehouse, for consumption on or after the publication date, as 
provided for by section 751(a)(2)(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; (2) if the exporter is not a firm covered 
in this 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 (3) 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 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 administrative review and notice are in accordance with 
section 751(a)(1) of the Act.

    Dated: July 31, 1997.
Robert S. LaRussa,
Acting Assistant Secretary for Import Administration.
[FR Doc. 97-20935 Filed 8-7-97; 8:45 am]
BILLING CODE 3510-DS-P