1970 Federal Register / Vol. 62, No. 9 / Tuesday, January 14, 1997 / Notices

circumstance-of-sale adjustment to

Minasligas’ FMV for bank charges

related to loans taken out to finance its

U.S. sales.

• Petitioners argue that the

Department erred by using an incorrect

amount of foreign inland insurance on

CCM’s U.S. sale.

• CCM argues that the Department

erred by failing to deduct post-sale

inland freight expenses from its home

market price.

Department’s Position

We agree, and have corrected these

errors in these final results of review.

We have also corrected one additional

error we noted in our review of the

preliminary results. There, for U.S.

sales, we used Minasligas’ dates of sale

as the date of shipment from its plant

because we believed the dates of

shipment not to be on the record.

However, we have determined that the

invoice dates are on the record in

verification exhibit 12. Therefore, in

these final results of review we have

used the invoice dates as the dates of

shipment.

Final Results of Review

As a result of our analysis of the

comments received, we determine that

the following margins exist for the

period July 1, 1993, through June 30,

1994:

Producer/manufacturer/exporter

Weightedaverage

margin

(percent)

CBCC .......................................... 64.39

CCM ............................................ 5.97

Eletrosilex ................................... 39.72

Minasligas ................................... 0

RIMA ........................................... 91.06

The Department shall determine, and

the Customs Service shall assess,

antidumping duties on all appropriate

entries. Individual differences between

USP and FMV may vary from the

percentages stated above. The

Department will issue appraisement

instructions directly to the Customs

Service.

Furthermore, the following deposit

requirements will be effective upon

publication of these final results of

review for all shipments of silicon metal

from Brazil entered, or withdrawn from

warehouse, for consumption on or after

the publication date, as provided by

section 751(a)(1) of the Tariff Act, and

will remain in effect until publication of

the final results of the next

administrative review: (1) the cash

deposit rates for the reviewed

companies will be those rates listed

above; (2) for previously reviewed or

investigated companies not listed above,

the cash deposit rate will continue to be

the company-specific rate published for

the most recent period; (3) if the

exporter is not a firm covered in this

review, a prior review, or the original

LTFV investigation, but the

manufacturer is, the cash deposit rate

will be the rate established for the most

recent period for the manufacturer of

the merchandise; and (4) if neither the

exporter nor the manufacturer is a firm

covered in this or any previous review

or in the LTFV investigation conducted

by the Department, the cash deposit rate

will be 91.06 percent, the ‘‘all others’’

rate established in the LTFV

investigation.

This notice serves as a final reminder

to importers of their responsibility

under 19 CFR 353.26 to file a certificate

regarding the reimbursement of

antidumping duties prior to liquidation

of the relevant entries during this

review period. Failure to comply with

this requirement could result in the

Secretary’s presumption that

reimbursement of antidumping duties

occurred and the subsequent assessment

of double antidumping duties.

This notice also serves as a reminder

to parties subject to APO of their

responsibility concerning the

disposition of proprietary information

disclosed under APO in accordance

with 19 CFR 353.34(d). Timely written

notification of the return/destruction of

APO materials or conversion to judicial

protective order is hereby requested.

Failure to comply with the regulations

and the terms of an APO is a

sanctionable violation.

This administrative review and notice

are in accordance with section 751(a)(1)

of the Tariff Act (19 U.S.C. §1675(a)(1))

and 19 CFR §353.22.

Dated: January 3, 1997.

Robert S. LaRussa,

Acting Assistant Secretary for Import

Administration.

[FR Doc. 97–816 Filed 1–13–97; 8:45 am]

BILLING CODE 3510–DS–P

DEPARTMENT OF COMMERCE

International Trade Administration

[A–351–806]

Silicon Metal From Brazil; Final

Results of Antidumping Duty

Administrative Review and

Determination Not To Revoke in Part

AGENCY: Import Administration,

International Trade Administration,

Department of Commerce.

ACTION: Notice of final results of

antidumping duty administrative review

and determination not to revoke in part.

SUMMARY: On September 5, 1996, the

Department of Commerce (the

Department) published the preliminary

results of its administrative review of

the antidumping duty order on silicon

metal from Brazil. This review covers

the period July 1, 1994, through June 30,

1995, and five manufacturers/exporters

of the subject merchandise to the United

States. The review indicates the

existence of margins for four firms.

We gave interested parties an

opportunity to comment on the

preliminary results. Based on our

analysis of the comments received and

new information submitted at the

Department’s request, we have changed

our results from those presented in our

preliminary results as described below

in the comments section of this notice.

EFFECTIVE DATE: January 14, 1997.

FOR FURTHER INFORMATION CONTACT: Fred

Baker, Alain Letort, or John Kugelman,

AD/CVD Enforcement Group III, Office

8, Import Administration, International

Trade Administration, U.S. Department

of Commerce, 14th Street and

Constitution Avenue, N.W.,

Washington, D.C. 20230; telephone:

(202) 482–2924, –4243, or –0649,

respectively.

SUPPLEMENTARY INFORMATION:

Background

On September 5, 1996, the

Department of Commerce (the

Department) published in the Federal

Register (61 FR 46779) the preliminary

results of its administrative review of

the antidumping duty order on silicon

metal from Brazil (July 31, 1991, 56 FR

36135). We solicited additional

information from Minasligas on October

1, 1996, from Eletrosilex on October 2,

1996, from CBCC on October 10, 1996,

and from RIMA on November 14, 1996.

We received responses on October 15,

October 16, October 24, and November

20, 1996, respectively. The Department

has now completed that administrative

review in accordance with section 751

of the Tariff Act of 1930, as amended

(the Act).

Applicable Statute and Regulations

Unless otherwise indicated, all

citations to the Act are references to the

provisions effective January 1, 1995, the

effective date of the amendments made

to the Act by the Uruguay Round

Agreements Act (URAA).

Scope of the Review

The merchandise covered by this

review is silicon metal from Brazil
Federal Register / Vol. 62, No. 9 / Tuesday, January 14, 1997 / Notices 1971

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 a higher

aluminum content 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 the product coverage.

The period of review (POR) is July 1,

1994, through June 30, 1995. This

review involves five manufacturers/

exporters of Brazilian silicon metal:

Companhia Brasileira Carbureto de

Ca ́lcio (CBCC), Companhia Ferroligas

Minas Gerais—Minasligas (Minasligas),

Eletrosilex Belo Horizonte (Eletrosilex),

Rima Eletrometalurgia S.A. (RIMA), and

Camargo Correˆa Metais (CCM).

Verification

As provided in section 782(i) of the

Act, we verified information provided

by CBCC and RIMA by using standard

verification procedures, including

onsite inspection of the manufacturers’

facilities, the examination of relevant

sales and financial records, and original

documentation containing relevant

information. Our verification results are

outlined in the public versions of the

verification reports.

Analysis of Comments Received

We gave interested parties an

opportunity to comment on the

preliminary results. We received case

and rebuttal briefs from Minasligas,

Eletrosilex, CCM, CBCC, RIMA, and a

group of five domestic producers of

silicon metal (collectively, the

petitioners). Those five domestic

producers are American Alloys, Inc.,

Elkem Metals Co., Globe Metallurgical,

Inc., SMI Group, and SKW Metals and

Alloys, Inc. We received a request for a

hearing from CBCC, Minasligas,

Eletrosilex, RIMA, and the petitioners.

We conducted a public hearing on

November 25, 1996.

Comment 1

Petitioners argue that the Department

erred by using the methodology used in

the final results of the second

administrative review of this order in

determining which U.S. sales to review.

In the second review final results, we

explained our methodology as follows:

1. Where a respondent sold merchandise,

and the importer of that merchandise had at

least one entry during the POR, we reviewed

all sales to that importer during the POR.

2. Where a respondent sold subject

merchandise to an importer who had no

entries during the POR, we did not review

the sales of subject merchandise to that

importer in this administrative review.

Instead, we will review those sales in our

administrative review of the next period in

which there is an entry by that importer.

We also said in the preliminary results

notice that after completion of the

review we would issue liquidation

instructions to Customs which would

instruct them to assess dumping duties

against importer-specific entries during

the period. See Silicon Metal From

Brazil, Final Results of Antidumping

Duty Administrative Review, 61 FR

46763, 46765 (September 5, 1996)

(Silicon Metal From Brazil; Second

Review Final Results.)

Petitioners argue that the

methodology described above and used

in the preliminary results of this review

is inconsistent with the Act because

section 751(a)(2) of the Act requires that

margins be based on sales associated

with entries during the POR. Petitioners

also cite to Torrington Co. v. United

States, 818 F. Supp. 1563, 1573 (CIT

1993) (Torrington) to demonstrate that

the CIT has held that the word ‘‘entry’’

as used in the statute refers to the

‘‘formal entry of merchandise into the

U.S. Customs territory.’’ Furthermore,

petitioners argue that the Department

itself has stated that the use of the term

‘‘entry’’ in the antidumping law refers

unambiguously to the release of

merchandise into the customs territory

of the United States. See Antifriction

Bearings (Other Than Tapered Roller

Bearings) and Parts Thereof From the

Federal Republic of Germany; Final

Results of Antidumping Duty

Administrative Review, 56 FR 31692,

31704 (July 11, 1991). Petitioners also

argue that the legislative history of

section 751 demonstrates that margin

calculations in administrative reviews

are to be based on sales of merchandise

that entered during the POR.

In addition to the above arguments

based on their interpretation of the

statute and case law, petitioners argue

that prior to issuance of the final results

of the second review of this order, the

Department’s practice was to review

only those sales that entered U.S.

customs territory during the POR. In

support of this statement, they cite the

questionnaire that the Department

issued to the respondents in the 1993–

94 review. It states that ‘‘purchase price

sales that have a sales date during the

period of review, but which entered

after the period of review, will be

covered in subsequent administrative

reviews.’’ In further support, they cite to

the questionnaire issued to the

respondents in this administrative

review which requests that each

respondent report only U.S. sales of

merchandise that entered for

consumption during the POR with the

exception of constructed export price

sales made after importation and export

price sales of merchandise for which the

entry date is not known.

Furthermore, petitioners argue that

the failure to calculate dumping margins

based on sales associated with entries

during the POR would result in

improper assessment of duties because

the duties assessed on entries during the

POR would have no relation to the

margin of dumping on those sales. Thus,

by assessing duties on entries at rates

unrelated to the margin of dumping on

the associated sales, petitioners argue,

the Department would violate 19 U.S.C.

§ 1673(2)(B), which requires that ‘‘there

shall be imposed upon such

merchandise an antidumping duty . . .

in an amount equal to the amount by

which the foreign market value exceeds

the United States price for the

merchandise.’’

Eletrosilex argues that the Department

rejected petitioners’ argument with

respect to section 751 of the Act as long

ago as 1991 in a rule-making

proceeding. There it asserted that

section 751 does not require

consideration solely of entries made in

the POR, and that the statute as a whole

requires a balanced consideration of

‘‘entries’’ and ‘‘sales’’ in the review

process. See Advance Notice of

Proposed Rulemaking (56 FR 63696,

63697, December 5, 1991). Furthermore,

in the final results of both the first and

second administrative review of this

proceeding the Department specifically

rejected petitioners’ arguments that the

statute requires consideration only of

entries made during the POR. See

Silicon Metal From Brazil; Final Results

of Antidumping Duty Administrative

Review, 59 FR 42806, 42813 (August 19,

1994) (Silicon Metal From Brazil; First

Review Final Results) and Silicon Metal

From Brazil; Second Review Final

Results. Eletrosilex concludes that the

Department has acted within its

discretion in reviewing Eletrosilex’s sale

made during this POR in this segment

of the proceeding.
1972 Federal Register / Vol. 62, No. 9 / Tuesday, January 14, 1997 / Notices

Department’s Position

We disagree with petitioners. The

Department most recently addressed

this issue in the final results of the

second review of this order. There we

stated:

We do not agree with petitioners that

section 751(a)(2) requires that we review only

sales that entered U.S. customs territory

during the POR. Section 751(a)(2) mandates

that the dumping duties determined be

assessed on entries during the POR. It does

not limit administrative reviews to sales

associated with entries during the POR.

Furthermore, to review only sales associated

with entries during the POR would require

that we tie sales to entries. In many cases we

are unable to do this. Moreover, the

methodology the Department should use to

calculate antidumping duty assessment rates

is not explicitly addressed in the statute, but

rather has been left to the Department’s

expertise based on the facts of each review.

‘‘* * * the statute merely requires that PUDD

(i.e., potentially uncollected dumping duties)

. . . serve as the basis for both assessed

duties and cash deposits of estimated

duties.’’ See The Torrington Company v.

United States, 44 F.3d 1572, 1578 (CAFC

1995).

Our analysis of this issue and

interpretation of the statute remain

unchanged from those announced in the

final results of the second review.

Furthermore, by applying a consistent

methodology in each segment of the

proceeding we ensure that we review all

sales made during the entire proceeding.

Changing the methodology could result

in our failure to review some sales.

Hence, in these final results of review

we have employed the methodology we

announced in the final results of the

second review.

Comment 2

Petitioners argue that evidence on the

record indicates that Minasligas’ and

Eletrosilex’s costs and prices have been

severely distorted by hyperinflation that

occurred prior to the start of the period

covered by this review, and that,

therefore, the Department should adopt

a methodology that eliminates the

effects of those distortions. These

distortions occurred, petitioners argue,

because the inventories that these

companies had on July 1, 1994 (the first

day of this POR) were purchased prior

to July 1, 1994, during the period when

Brazil experienced hyperinflation.

Minasligas argues that there is no

evidence that its costs or prices were

affected by hyperinflation that occurred

prior to the POR. It makes the following

points:

• During the three months prior to

July 1994 (the first month in recent

history during which there was no

hyperinflation in Brazil and also the

first month covered by this

administrative review) the effects of

hyperinflation had already been greatly

attenuated in the negotiations of

material prices in Brazil because of the

use of the URV (unit of real value) as a

unit of exchange. (Minasligas stated that

the URV was a unit reference value

pegged to the U.S. dollar which the

Brazilian government introduced into

the Brazilian economy in March 1994.)

• Minasligas’ accounts were subject

to a one-time restatement into URVs at

the end of June 1994.

• Petitioners have pointed to no

support in the record for their claim that

Minasligas had significant inventories of

material inputs for silicon metal

production in the first half of 1994.

• Petitioners have pointed to no

support in the record for their claim that

the value of such inventories was

affected by hyperinflation during the

first half of 1994.

• Petitioners have pointed to no

support in the record for their claim that

these inventories were carried over into

the POR.

• The end-of-year inventories that

Minasligas records in its financial

statements include materials used in the

production of merchandise which is not

subject to this proceeding.

• The petitioners’ request that the

Department adopt a methodology that

eliminates the effects of alleged

distortions is limited to only two

respondents. One would think,

Minasligas argues, that if a country is

hyperinflationary during a certain

period, it would equally affect all

companies doing business in that

country.

Eletrosilex argues that the

introduction of the URV in March 1994

resulted in a substantial reduction in

inflation during the period March

through June 1994, and that it was

during the latter two months of this

period that it bought all of the stock it

had in inventory on July 1, 1994.

Moreover, it argues that on July 1, 1994

(the date of the introduction of the real

plan) it converted all of its inventory

from cruzeiros reais to reais based upon

the URV value at that date. This

conversion, Eletrosilex argues, refutes

the petitioners’ allegation of any impact

on the value of its inventory on July 1,

1994. Finally, Eletrosilex argues that the

U.S. sale upon which the Department

based its margin calculation for

Eletrosilex in this review was sold long

after Eletrosilex used up its entire stock

in inventory on July 1, 1994. Therefore,

Eletrosilex concludes, there is no

possible effect on Eletrosilex’s costs

from any high inflation that may have

existed at some time before the POR.

Department’s Position

We agree with petitioners. Evidence

on the record shows that Eletrosilex’s

and Minasligas’ cost of materials for the

first several months of the POR reflect

significant fluctuations. ‘‘See’’

petitioners’ July 17, 1996 and July 18,

1996 submissions. These fluctuations

occurred because these respondents

consumed inventory which they had

purchased during a period of

hyperinflation. Moreover, these

respondents reported their POR costs

based on their normal books and records

which reflect historic costs. Therefore,

we requested, and Minasligas and

Eletrosilex provided, information

regarding the purchase dates, quantities,

and amounts recorded in their July 1,

1994 beginning inventory. Because the

reported costs of materials included the

cost of the beginning inventory based on

historic costs, these amounts were

understated by the rates of inflation that

occurred from the date of purchase until

June 30, 1994. Therefore, we revalued

the beginning inventory of July 1, 1994

by applying the UFIR index to the value

of the inventory from the date of

purchase until July 1, 1994.

Comment 3

Petitioners argue that for two reasons

Minasligas does not qualify for

revocation. (In the preliminary results of

this review we stated that we did not

intend to revoke the order on Minasligas

at the completion of this administrative

review because we intended to revoke

the order on Minasligas upon

completion of the third administrative

review.) First, petitioners allege

Minasligas has dumped in this and

every prior segment of this proceeding,

and therefore has not met the regulatory

requirement of having not sold at less

than fair value for at least three years.

See 19 CFR § 353.25(a)(2)(i). The three

years in question are the first (91–92),

second (92–93), and third (93–94)

reviews. For the first and second

reviews, the Department calculated a

margin of zero percent in its final results

of review. For the third review the

Department calculated a margin of zero

percent for its preliminary results. With

respect to the first review (which is in

litigation before the CIT), petitioners

argue that after the Department corrects

the errors for which it has already

conceded error, Minasligas will have a

margin. They argue, with respect to the

second review, that after the Department

corrects the ministerial errors they

allege it made in its final results,

Minasligas will again have a margin.

They argue, with respect to the third

review, that after the Department
Federal Register / Vol. 62, No. 9 / Tuesday, January 14, 1997 / Notices 1973

corrects the calculation and

methodological errors which they allege

it made, Minasligas will again have a

margin.

Second, petitioners argue that the

Department cannot correctly determine

that Minasligas is not likely to resume

dumping in the future, and without this

determination the Department cannot

revoke the order. ‘‘See’’ 19 CFR

§ 353.25(a)(2)(ii). Petitioners base this

argument on the following factors:

(1) Minasligas had a margin of greater

than de minimis in the preliminary

results of this administrative review.

See Silicon Metal from Brazil,

Preliminary Results of Review and

Intent Not to Revoke in Part, 61 FR

46779, 46781 (September 5, 1996)

(preliminary results).

(2) Minasligas has submitted no

evidence that it is unlikely that it will

dump in the future.

(3) The Department has not verified

any information that Minasligas is

unlikely to dump in the future. Citing

19 U.S.C. § 1677e(b)(2)(B) and 19 CFR

§ 353.25(c)(2)(ii), petitioners argue that

the statute and regulations require that

the basis for the ‘‘likelihood’’

determination be verified, and that

because the Department did not verify

any such basis, Minasligas does not

qualify for revocation.

Furthermore, petitioners argue that

analysis based on the criteria that the

Department used in Brass Sheet and

Strip from Germany show that

Minasligas is likely to resume dumping.

See Brass Sheet and Strip from

Germany, Final Results of

Administrative Review, 61 FR 49727,

49730 (September 23, 1996) (Brass

Sheet and Strip from Germany). These

criteria include a dramatic decline in

shipments after publication of the

antidumping duty order and the low

level of shipments by the respondent.

Both of these factors, petitioners allege,

are present here with respect to

Minasligas.

Minasligas argues, first, that in two

consecutive administrative reviews

prior to the issuance of the preliminary

results the Department found Minasligas

not to have dumped, and that, therefore,

if the Department issues a final

determination of no dumping in the

final results of the third review, it will

have met the requirement of 19 CFR

353.25(a)(2)(i). Secondly, Minasligas

argues that 19 CFR 353.25(a)(2)(ii)

requires a finding of no likelihood of

dumping in the future, but does not,

contrary to petitioners’ suggestion,

require Minasligas to provide, or the

record to contain, evidence that

Minasligas is not likely to resume

dumping in the future. Furthermore,

Minasligas argues that there is evidence

on the record that Minasligas will not

dump in the future. That evidence

consists of Minasligas’ written

agreement to reinstatement of the

antidumping duty order if it is found to

be selling at less than fair value in the

future.

Department’s Position

To qualify for revocation in part

under 19 CFR 353.25(a)(2)(i), a

respondent must have sold the subject

merchandise at not less than foreign

market value for at least three

consecutive years. Our final results of

review of the first three reviews of this

order indicate that Minasligas had no

margins. However, in order to revoke an

order in part the Department must also

be satisfied that the firm is not likely to

resume dumping in the future. In this

administrative review the Department

has found that Minasligas had a

dumping margin of greater than de

minimis. Accordingly, the issue of

likelihood of dumping in the future is

moot because Minasligas has in fact

resumed dumping. Therefore, we are

not revoking the order in part for

Minasligas.

Comment 4

Petitioners argue that the Department

erred in its calculation of Minasligas’

cost of production and constructed

value (COP/CV) by using the

depreciation values that Minasligas

reported. Petitioners find two flaws in

this calculation. First, Minasligas’

calculation of depreciation, petitioners

allege, does not reflect the useful life of

the assets, but rather reflects an

extremely accelerated useful life.

Petitioners argue that the Department’s

practice is to reject accelerated

depreciation of an asset where such

accelerated depreciation fails to allocate

the cost of the asset on a consistent basis

over the life of the asset, which,

petitioners allege, is the case here.

Second, Minasligas’ depreciation

calculation, petitioners allege, does not

restate the value of the assets to account

for hyperinflation. The Department’s

practice, petitioners argue, requires such

restatement.

Therefore, because they find

Minasligas’ calculation deficient,

petitioners submitted a recalculation of

depreciation for some assets based on

what they believe to be the actual useful

life of those assets, and argue that the

Department should use this

recalculation in its final results of

review. The Department, petitioners

argue, should also solicit information

from Minasligas to determine the proper

depreciation for all assets related to the

production of silicon metal that were

not included in its recalculation.

Minasligas argues that petitioners’

argument is flawed. Minasligas points to

documentation submitted on October

15, 1996, at the Department’s request,

which demonstrates (1) that Minasligas

did not depreciate its assets over the

shortened period that petitioners

suggest (though it is not the lengthened

useful life that petitioners argue should

be used), (2) that the depreciation

reported in its COP/CV tables for

purposes of this proceeding is fully

supported by Minasligas’ accounting

records; (3) that the value of the assets

subject to depreciation are restated in

current currency to account for

hyperinflation through the use of

special indices known as the BTN/UFIR

indices. Furthermore, Minasligas argues

that the Department fully verified this

information. Moreover, Minasligas

argues that the petitioners’ argument is

based on a misunderstanding of some of

the columns in the verification exhibit

upon which they base their argument.

Finally, Minasligas argues that to

recalculate depreciation, using the

longer useful lives that petitioners

suggest, would be unfair because the

Department has already completed two

administrative reviews in which

Minasligas calculated depreciation

using the shorter useful lives.

Minasligas contends that their useful

lives are the basis for the depreciation

calculation that Minasligas records in its

books and which it reported to the

Department. Therefore, Minasligas

argues that, in the alternative, if the

Department does decide to recalculate

its depreciation using a longer

depreciation period, it should adopt a

methodology that takes into account the

depreciation expenses that the firm

reported in the previous administrative

reviews.

Department’s Position

We agree with Minasligas, except that

we did not verify the firm for this

period. The CIT has upheld the

Department’s calculation of

depreciation based on a respondent’s

financial records where their financial

records are consistent with foreign

GAAP principles and where those

records do not distort actual costs. See

Laclede Steel Co. v. United States, 18

CIT 965, 975 (1994). Here, Minasligas

has historically used accelerated

depreciation, consistent with Brazilian

GAAP. Moreover, we note that we have

in the past used accelerated

depreciation where the respondent has

historically used it in its financial

statements. See Foam Extruded PVC

and Polystyrene Framing Stock from the
1974 Federal Register / Vol. 62, No. 9 / Tuesday, January 14, 1997 / Notices

United Kingdom; Final Determination of

Sales at Less Than Fair Value; 61 51411,

51418 (October 2, 1996). Furthermore,

we agree with Minasligas that to

recalculate depreciation using a longer

useful life for Minasligas’ assets after

having used a shorter life in prior

reviews would allocate costs to this

review that have already been

accounted for in prior reviews, and

would therefore be inequitable. Finally,

we agree with Minasligas that its use of

the BTN/UFIR indices accurately

restates the value of its assets.

Therefore, in these final results of

review, as in the preliminary results of

review, we have used Minasligas’

reported depreciation in calculating

COP and CV.

Comment 5

Petitioners argue that the Department

erred in its calculation of interest

expense for Minasligas, Eletrosilex,

CBCC, and RIMA by allowing an offset

to interest expenses for claimed interest

income. Petitioners base their argument

on two factors: (1) that these companies

did not substantiate that the reported

interest income was from short-term

investments, and (2) many of the

categories these companies listed in

their enumeration of short-term interest

income are, on their face, not interest

income derived from short-term

investments of working capital.

As for the latter argument, petitioners

point out that RIMA’s claimed income

consists of revenue from late payment

charges paid by home market customers

and discounts that suppliers grant on

payment of an invoice. These categories

are not, petitioners assert, interest

income derived from short-term

investments. As for Eletrosilex,

petitioners focus on one transaction

recorded on Eletrosilex’s 1994 financial

statement which, they allege, consists of

capital gains, rather than interest

income derived from short-term

investments of working capital. For

CBCC petitioners allege that there is

evidence on the record (verification

exhibit 29) that some of the interest

income claimed by CBCC’s Brazilian

parent company, Solvay do Brasil

(whose interest expenses, petitioners

argue in comment 25 below, should be

consolidated with those of CBCC), are

not derived from short-term

investments. Petitioners also argue that

CBCC’s itemization of its interest

income (verification exhibit 17)

indicates that much of CBCC’s interest

income is also not derived from shortterm investments. Therefore, petitioners

argue, in the final results the

Department should make no offset to

interest expenses for any of CBCC’s or

Solvay do Brasil’s claimed interest

offset.

Minasligas argues that it had no longterm financial investments, and that all

of its interest income was related to

production operations. Moreover, it

states, it fully replied to all of the

Department’s inquiries about its interest

expenses and income. Thus, it argues,

there is no basis to reject Minasligas’

claim for an offset to its interest

expense.

RIMA argues that, if the Department

uses its financial statement to calculate

its interest expenses, it should also use

its financial statement to calculate its

interest revenue. Furthermore, the firm

stands by the claim in its supplemental

questionnaire response (SQR) of April

30, 1996 (at 33–34) that its financial

income is short-term.

Eletrosilex argues that its financial

statement shows that the sole

transaction on which petitioners focus

occurred between July 28, 1994 and

December 27, 1994, and, therefore,

qualifies as short-term under any

analysis. The transaction involved an

investment by Eletrosilex in reaisdenominated bonds, purchased from

funds obtained by borrowing on dollardenominated export notes, and later

selling the bonds after accrual of pro

rata interest. The transaction,

Eletrosilex argues, was simply a shortterm investment which produced

interest income from the investment.

The investment return was heightened

by the substantial over-valuation of the

real at the time and the use of dollardenominated export notes to finance the

purchase of the bonds. This transaction,

Eletrosilex argues, clearly qualifies as

financial revenue permissible under

long-settled Department precedent.

CBCC argues that the Department

fully verified the interest income of

CBCC and Solvay do Brasil, and found

it to be short-term. See July 22, 1996

verification report, pp. 27–28. It also

argues that the petitioners’ argument

with respect to the interest revenue of

CBCC and Solvay do Brasil is irrelevant

in light of the Department’s practice to

use consolidated financial statements.

Because of this practice, CBCC argues,

the relevant financial statement is that

of its ultimate parent, Solvay and Cie,

and not that of either CBCC or Solvay

do Brasil.

Additionally, petitioners argue that

the Department erred by reducing

Eletrosilex’s cost of manufacture (COM),

rather than its interest expenses, by its

reported interest revenue.

Department’s Position

We agree with petitioners that almost

all of Minasligas’ reported ‘‘interest

income’’ consists of items that are

totally unrelated to interest income. The

financial statements for Minasligas and

its parent, Delp Engenharia Mecaˆnica

S.A. (Delp), demonstrate that over 95

percent of both companies’ reported

‘‘interest income’’ consists of ‘‘monetary

variation,’’ ‘‘monetary correction,’’ and

‘‘income from short-terms applications.’’

The Department’s verification report for

Minasligas in the immediately

preceding review clarifies that

‘‘financial applications’’ (which would

include ‘‘income from short-term

applications’’) refers to compensation

for inflation. At no point has Minasligas

demonstrated for the record that the

amounts reported for these categories of

income constitute interest income

derived from short-term investments of

working capital. Nor has Minasligas

demonstrated that the claimed interest

income was derived from short-term

investments of working capital merely

by stating in its rebuttal brief that its net

interest income exceeded its net interest

expense.

Similarly, the financial statements

submitted by Minasligas show that the

category ‘‘interest received’’ included,

inter alia, (1) charges paid by customers

for Delp’s granting of delayed payment

terms, which are really sales revenue;

(2) discounts obtained from suppliers;

(3) dividends received; and (4) exchange

gains or losses. See Minasligas’ April 30,

1996 SQR at 37 and exhibit 19. These

items clearly do not represent interest

income from short-term investments.

For the above reasons, we have

reduced Minasligas’ interest income by

the total amount of the items incorrectly

included therein by Minasligas (see

Final Analysis Memorandum from Fred

Baker to the File).

With respect to RIMA, we agree with

petitioners that the interest income

categories RIMA reported (i.e., revenue

from late payment charges paid by home

market customers and discounts that

suppliers grant on payment of an

invoice) by definition do not constitute

interest income from short-term

investments. See RIMA’s April 30, 1996

supplemental questionnaire response

(SQR) at 35. Therefore, in these final

results of review we have not allowed

an offset to RIMA’s financial expenses

for the claimed interest income.

With respect to Eletrosilex, we agree

with petitioners that Eletrosilex is not

entitled to an adjustment. The

transaction in question consisted of an

investment in Brazilian bonds

denominated in reais and financed by

borrowing on dollar-denominated

export notes. Eletrosilex later sold the

real-denominated bonds after they had

accrued pro rata interest for Eletrosilex.
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Such a transaction would result in

interest income and capital gains; only

the former would qualify as an offset to

interest expenses. Therefore, in these

final results of review, we have not

made an adjustment to Eletrosilex’s

interest expenses for this transaction.

Moreover, in these final results of

review, unlike the preliminary results of

review, we have calculated Eletrosilex’s

financial expenses by multiplying its

annual COM by the ratio between the

financial expenses and cost of sales

reported in its 1994 financial statement.

With respect to CBCC, we agree with

CBCC in part. As explained in our

response to comment 25 below, we

agree with CBCC that its financial

expenses should be calculated based on

the consolidated financial statement of

Solvay & Cie, and not that of Solvay do

Brasil. However, we do not agree that

we should make an adjustment for

short-term income because, though we

did examine CBCC’s financial income at

verification and found that CBCC did

have some short-term financial

revenues, not only did CBCC not make

an offset claim in this review for any

short-term financial income until

submitting its rebuttal brief, but CBCC

did not provide for the record any

supporting documentation. See CBCC’s

April 30, 1996 SQR at 28 and exhibit 16.

Therefore, in these final results of

review, as in the preliminary results of

review, we have not offset CBCC’s

financial expenses for any short-term

interest income.

Comment 6

Petitioners argue that the Department

erred in calculating Minasligas’ COP by

using Minasligas’ submitted

computation of direct labor and variable

overhead. This computation, petitioners

argue, was flawed because Minasligas

allocated these costs based on the

number of furnaces used to produce

ferrosilicon and silicon metal.

Furthermore, petitioners argue,

Minasligas used this same method to

calculate its general and administrative

(G&A) expenses in the first

administrative review of this order, and

the Department rejected it there because

G&A expenses are period expenses that

relate to the operation of the company

as a whole, and are not related to a

particular product or process. See

Silicon Metal from Brazil; First Review

Final Results, at 42811. Petitioners

argue that using this same method to

allocate direct labor and variable

overhead is equally wrong. Because

these costs relate to production,

petitioners argue, the Department

should allocate these costs based on the

actual production volume for each

product.

Minasligas argues that it allocated its

direct labor and overhead equally to

each direct cost center pursuant to its

normal accounting practices. Because

the same furnaces are dedicated to the

production of the same product,

Minasligas allocated these costs on the

basis of the furnace ratio. This

methodology does not cause distortions,

Minasligas argues, because the same

number of personnel operates each

furnace regardless of the product

produced, and the factory overhead

expenses are equally shared by all the

furnaces.

Department’s Position

We agree with petitioner. Direct labor

and variable overhead are a function of

production, and not the number of

furnaces dedicated to the production of

each product. Therefore, for these final

results of review we have recalculated

Minasligas’ direct labor and variable

overhead. In this recalculation we have

allocated direct labor and variable

overhead based on the production

volume of silicon metal relative to total

production.

Comment 7

Petitioners argue that the Department

must add to Minasligas’ and

Eletrosilex’s CV the ICMS tax that they

collect from their exports of silicon

metal because it is included in the

reported U.S. selling prices. They argue

that to do otherwise would result in a

dumping margin distorted by the use of

an artificially high selling price as the

basis for U.S. price (USP). Petitioners

argue that, in the alternative, the

Department should reduce USP by the

amount of the ICMS taxes included in

the reported USP pursuant to section

772(d)(2)(A) (sic) of the Act, which

requires that USP be reduced by ‘‘any

additional costs, charges, and expenses,

and United States import duties,

incident to bringing the merchandise

from the place of shipment in the

country of exportation to the place of

delivery in the United States.’’

Minasligas argues that the alternatives

the petitioners suggest will not result in

a tax-neutral comparison. It argues that

if the CV already includes ICMS taxes

paid to suppliers, then adding to the CV

the ICMS tax which is included in the

U.S. price will overstate taxes in CV and

distort the dumping results. Similarly,

Minasligas states, if the CV includes the

value-added taxes (VAT) (i.e., ICMS and

IPI taxes) paid to suppliers, then

deducting ICMS taxes from the U.S.

price will result in an apples-to-oranges

comparison.

Eletrosilex argues that to be consistent

with the URAA, the Department should

remove consumption taxes from all

consideration in U.S. and home market

price determinations.

Department’s Position

We disagree with petitioners’

contention that the ICMS assessed on

the U.S. sale should be deducted from

the U.S. price. We addressed this issue

with respect to Eletrosilex in the final

results of the second administrative

review of this order. There we stated

that because the ICMS tax assessed on

the U.S. sale is not an export tax, it

should not be deducted from the U.S.

price. See Silicon Metal from Brazil;

Second Review Final Results, at 46770.

However, where the ICMS tax is

included in the U.S. price, CV should

not include both the ICMS tax paid on

the purchases of material inputs and the

ICMS tax assessed on the U.S. sale, as

this would double-count taxes. Thus, for

the calculation of CV in this situation,

we ensured that the amount of ICMS tax

included in CV was the higher of either

the ICMS tax on purchases of material

inputs or the ICMS tax included in the

U.S. price.

Comment 8

Petitioners argue that the Department

erred in its treatment of taxes in the cost

test in two ways. First, they argue that

the Department erred by not including

PIS and COFINS taxes in Minasligas’

COM for COP. The preliminary results

analysis memorandum, petitioners state,

indicates that the Department intended

to include PIS and COFINS in COM, but

its COP calculation worksheet indicates

that, in fact, it did not do so. Second,

petitioners argue that the Department

erred in its computation of Eletrosilex’s

and CBCC’s COP by not including in the

COM the IPI taxes that these companies

pay on their purchases of inputs.

Petitioners argue that because

Eletrosilex and CBCC pay IPI taxes on

their inputs, but IPI taxes are not

assessed on sales of silicon metal, the

Department should include all IPI taxes

in the COM.

Eletrosilex argues that to be consistent

with the URAA, the Department should

remove consumption taxes from all

consideration in U.S. and home market

price determinations. Furthermore,

Eletrosilex argues that IPI taxes are

subject to refund from the Brazilian

government.

CBCC argues that it can offset the IPI

taxes it pays on the purchase of material

inputs with the IPI tax it collects on the

sale of the finished product from

domestic customers. Because CBCC is

able to offset the IPI taxes paid on
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material inputs by the IPI taxes it

collects from the sale of ferrosilicon to

domestic customers, CBCC argues, IPI

taxes are not a cost of producing silicon

metal for CBCC. CBCC also states that in

this review the only material input for

which CBCC paid IPI taxes is electrode

paste, and it included these IPI taxes in

the reported cost of this product, even

though they do not appear in a separate

line item on the COP worksheet that

CBCC submitted to the Department.

RIMA argues that the Department

should make no further addition to its

COP for PIS and COFINS taxes because

these taxes are already included in its

reported direct materials costs.

Department’s Position

As explained more fully in our

response to comment 26 (below), we

have determined that PIS and COFINS

taxes are gross revenue taxes, and

therefore are not taxes that a buyer pays

directly when purchasing materials. For

this reason, in order for COP to reflect

the complete cost of materials, the costs

the Department uses in its calculation of

COP must not be net of any hypothetical

tax amounts that are presumably

imbedded within the purchase price of

the materials. Here, Minasligas reported

its material costs net of a value that it

calculated, at the Department’s request,

that represented the PIS and COFINS

embedded within its cost of materials.

Thus, in order for the COP to reflect the

full purchase price of the materials, we

must add to its reported material costs

the hypothetical values that Minasligas

reported as PIS and COFINS taxes on its

material inputs. We have done so in

these final results of review. Moreover,

because we have determined that the

PIS and COFINS taxes are gross revenue

taxes, and are not imposed on a

transaction-by-transaction basis, we

have not deducted any reported PIS and

COFINS taxes from the price to which

we compare COP in the cost test.

We agree with petitioners that the IPI

tax (a Brazilian Federal value-added tax)

should be included in COM because it

is not a tax which the respondents can

recover from sales of silicon metal.

Therefore, in these final results of

review we have included the IPI tax in

the COM for Eletrosilex and CBCC.

However, we have not made a separate

addition for this tax to RIMA’s COM

because evidence on the record

indicates that RIMA already included

the IPI tax in the reported COM. We

have made a separate addition to

CBCC’s COM for the IPI tax because

evidence on the record of this review

indicates that CBCC included only a

portion of the IPI taxes in its material

costs.

Comment 9

Petitioners argue that, with respect to

Minasligas, Eletrosilex, CBCC, and

RIMA, in accordance with 19 U.S.C.

§ 1677b(e)(1)(A) of the Act, the

Department must include in CV all taxes

on purchases of inputs.

Minasligas argues that the Department

should calculate a CV that excludes

VAT taxes paid to the suppliers of the

material inputs. The basis for this

argument is that when Minasligas

collects ICMS taxes from U.S.

customers, it can offset such ICMS taxes

against the tax it pays to its suppliers.

Accordingly, the ICMS taxes paid on the

material inputs are, in Minasligas’ view,

‘‘refunded or remitted’’ upon

exportation of the merchandise to the

United States. See 777(3)(1)(A) of the

Act. Furthermore, Minasligas argues, in

order to make a fair comparison, the

U.S. price should also not include ICMS

taxes. In the alternative, Minasligas

argues that if the CV does not include

ICMS taxes paid on the material inputs,

the same absolute amount of ICMS taxes

as that included in the U.S. price could

be added to the CV in order to achieve

a tax-neutral result.

RIMA argues that the ICMS and IPI

taxes should not be included in the cost

of materials because, under the

Brazilian VAT system, taxes paid on

materials can be recovered from taxes

collected on the sales of the

merchandise produced from such

materials. The CIT, RIMA argues, has

disagreed with petitioners’

interpretation of 19 U.S.C.

§ 1677b(e)(1)(A), the predecessor

provision to 19 U.S.C. § 1677b(e)(3), and

held that the statute does not provide

‘‘refund or remission’’ as the only

instance in which taxes upon inputs

will not constitute cost of materials. The

CIT noted that ‘‘in a tax scheme such as

Brazil’s a respondent may be able to

show that a value-added tax on inputs

did not in fact constitute a ‘‘cost of

materials’’ for the exported product.’’

See AIMCOR v. United States, Ct. No.

94–03–00182, Slip Op. 95–130 (July 20,

1995) (AIMCOR) at 21.

Department’s Position

We agree with petitioners. In the final

results of the second review of this

order, the Department stated:

because section 773(e)(1)(A) of the Tariff Act

does not account for offsets of taxes paid due

to home market sales, we did not account for

the reimbursement to the respondents of

ICMS and IPI taxes due to home market sales

of silicon metal. The experience with regard

to home market sales is irrelevant to the tax

burden borne by the silicon metal exported

to the U.S.

See Silicon Metal from Brazil; Second

Review Final Results, at 46769. Our

analysis of the issue and interpretation

of the statute have not changed since

publication of the second review final

results. Thus, in keeping with our prior

determination on this issue, we have

included in CV all taxes paid on

purchases of material inputs, except in

those instances where the ICMS tax

included in the export price exceeded

the amount of the taxes on the material

inputs. In those situations, we included

in CV the higher of the two amounts.

See our position on comment 7.

Comment 10

Petitioners argue that the Department

erred by not including Minasligas’

claimed duty drawback in CV. This

drawback consists of taxes and import

duties that the government of Brazil

suspended on Minasligas’ purchases of

imported electrodes used in the

production of silicon metal destined for

export. Petitioners argue that because

the Department added the duty

drawback to U.S. price, and because the

taxes represented by the drawback were

not elsewhere represented in CV, the

Department should add the drawback to

CV in order to make a fair comparison

of U.S. price to CV.

Minasligas argues that in the

preliminary results the Department

correctly added duty drawback to U.S.

price for comparison with a sales-based

normal value (NV). However, if the

Department uses CV in the final results,

and includes indirect taxes in CV, it

must still add duty drawback to U.S.

price to make a fair comparison.

Department’s Position

We agree with petitioners. The

Brazilian duty drawback law applicable

to Minasligas suspends the payment of

ICMS and IPI taxes that would

ordinarily be due upon importation of

electrodes. Therefore, because the ICMS

and IPI taxes are suspended, we cannot

conclude that they are already included

in the COM or reported tax payments

that Minasligas reported. Thus, we need

to add to CV the full amount of the duty

drawback that we added to USP in

accordance with section 772(c)(1)(B) of

the Act. We have done so in these final

results of review. This methodology is

identical to the methodology announced

in the final results of the prior review

of this case. See Silicon Metal from

Brazil; Second Review Final Results, at

46770.

Comment 11

Petitioners argue that the Department

erred by calculating RIMA’s, CBCC’s,

and Minasligas’ home market imputed
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credit based on prices that include VAT.

The Department’s practice, petitioners

argue, is to exclude VAT collected on

home market sales from the prices used

in calculating imputed credit expenses.

Thus, petitioners argue, in the final

results of review the Department should

exclude ICMS taxes from the prices

used to calculate home market imputed

credit.

Minasligas and RIMA argue, based on

the tax policies of the government of

Brazil, that ICMS taxes should be

included in the imputed credit

calculation. They argue that imputed

credit expenses represent the

opportunity cost of financing accounts

receivable, and that this opportunity

cost does not apply solely to a portion

of the sale, but to the entire revenue that

is generated by the sale. During the

period in which the customer’s payment

is outstanding, not only must Minasligas

and RIMA finance their production

operations, they must also pay any

ICMS amounts they owe to the Brazilian

government. The payment of any such

amounts before they received payment

from their customers becomes part of

the cost of financing receivables.

Therefore, Minasligas and RIMA argue,

ICMS taxes should be included in the

imputed credit calculation.

Department’s Position

We agree with petitioners. We

addressed this issue in Silicomanganese

from Venezuela. There we responded to

the argument now set forth by

Minasligas and RIMA. We said:

The Department’s practice is to calculate

credit expenses exclusive of VAT. (See the

discussion of our VAT methodology in the

preliminary determination (59 FR 31204,

31205, June 17, 1994.) Theoretically, there is

an opportunity cost associated with any postservice payment. Accordingly, to calculate

the VAT adjustment argued by Hevensa

would require the Department to calculate

the opportunity costs involved with freight

charges, rebates, and selling expenses for

each reported sale. It would be an impossible

task for the Department to attempt to

determine the opportunity cost of every such

charge and expense.

See Silicomanganese from Venezuela,

59 FR 55436, 55438 (November 7, 1994)

(Silicomanganese from Venezuela). In

these final results of review we have

followed our practice outlined in

Silicomanganese from Venezuela. See

also Ferrosilicon from Brazil; Final

Results of Antidumping Duty

Administrative Review, 61 FR 59407,

59410 (November 22, 1996)

(Ferrosilicon from Brazil; First Review

Final Results).

Comment 12

Petitioners argue that the Department

erred in its margin calculation for

Minasligas by converting the cruzeiro

value of its U.S. sales into dollars, rather

than using the actual U.S. value of the

U.S. sales since they were originally

denominated in U.S. dollars. They argue

that the needless recalculation of U.S.

price had the effect of increasing the

U.S. price.

Minasligas argues that it reported its

U.S. sales in cruzeiros (as recorded in its

books), and that the Department

correctly converted them into dollars

using the average exchange rate of the

month of shipment. This methodology,

Minasligas argues, is in accordance with

the Department’s practice of comparing

the U.S. price to the CV or NV in the

month of shipment.

Department’s Position

We agree with petitioners. Our

practice is to use the actual U.S. price

in the currency in which it was

originally denominated on the date of

sale, and to avoid any unnecessary

currency conversions. Evidence on the

record indicates that Minasligas’ U.S.

sales were originally denominated in

U.S. dollars. See Minasligas’ April 30,

1996 SQR, pp. 16–17. Therefore, in

these final results of review we have

used the actual dollar value of the U.S.

sale in the margin calculation.

Comment 13

Petitioners argue that the Department

erred by calculating negative imputed

U.S. credit expenses for Minasligas and

CBCC. This occurred, petitioners state,

because the Department used as the

payment date the date that these

companies received payment from their

banks under the terms of their advance

exchange contracts (ACC). Under the

terms of an ACC, a Brazilian bank pays

Minasligas and CBCC the value of their

U.S. sales, and the U.S. customer pays

the bank. This arrangement sometimes

results in Minasligas and CBCC

receiving payment for their sales prior

to shipment, and thus incurring

negative credit expenses. However,

petitioners argue that though the CIT

has allowed negative U.S. credit

expenses under some circumstances,

those circumstances are not present

here. Specifically, in AIMCOR (at 14–

15) the CIT permitted such an

adjustment for credit revenue partly

because the ACCs were tied to specific

sales. Evidence on the record of this

review, petitioners suggest,

demonstrates that Minasligas’ and

CBCC’s ACCs were not tied to specific

sales.

With respect to Minasligas,

petitioners point out that Minasligas

entered into multiple ACCs for each

sale, and that review of the record

shows that there is no correspondence

between the dates of the ACC contracts

and Minasligas’ reported dates of sale

for the sales covered in this review.

Furthermore, petitioners argue, review

of the two ACC contracts (which

pertained to the same sale) on the record

of this review reveals that the contracts

do not contain an invoice number,

customer name, or country of

exportation, and are not specific to the

merchandise subject to review.

Moreover, petitioners argue, the dollar

amount of the ACCs does not tie to any

specific U.S. sale reviewed in this

proceeding. From this evidence

petitioners conclude that the ACCs were

not specific to U.S. sales, and that,

therefore, the Department should use in

its imputed credit calculation the date

of payment by the U.S. customer.

With respect to CBCC, petitioners

point out that CBCC financed its U.S.

sales using ACCs that covered sales

during an extended period. In addition,

they allege that evidence on the record

of Ferrosilicon from Brazil demonstrates

that CBCC’s ACCs are not tied to

specific sales. See Ferrosilicon from

Brazil, Final Determination of Sales at

Less than Fair Value, 54 FR 732 (Jan. 6,

1994) (Ferrosilicon from Brazil; Final

Determination).

Minasligas argues that petitioners’

argument is unfounded. First,

Minasligas argues, in Ferrosilicon from

Brazil; Final Determination it had

entered into multiple contracts for

individual sales too, and there was also

no correspondence between the dates of

sale and the contract dates, but still the

CIT upheld in AIMCOR the

Department’s calculation of negative

U.S. credit expenses. See Ferrosilicon

from Brazil, Final Determination, and

also AIMCOR. Second, Minasligas

argues that the petitioners are factually

incorrect in saying that the dollar value

of the ACC does not tie to any specific

sale. It states that the sum of the two

ACC amounts in local currency equals

the amount in reais that Minasligas

reported in its U.S. sales listing. Third,

the respondent argues that the fact that

one of the two ACCs indicates that the

exported product was not silicon metal

was a mistake by the bank, and that

Minasligas was not aware of this

mistake at the time it provided this

information to the Department.

Problems of this nature, Minasligas

argues, are verification problems, and

the Department opted not to verify

Minasligas in this review. Nevertheless,

Minasligas states, it is prepared to
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provide the Department additional

information that clearly shows that this

ACC relates to the sale of silicon metal.

CBCC argues that its ACCs are tied to

specific sales. The Department, CBCC

argues, verified the ACC documentation

and tied each ACC to a particular export

transaction. See July 22, 1996

verification report, pp. 14–15.

Additionally, CBCC argues that the date

on which the ACC is contracted is

irrelevant to the Department’s analysis

as long as the ACC contract is tied to a

particular export transaction.

Department’s Position

We agree with CBCC and Minasligas.

We have carefully reviewed the record

of this review, and are persuaded that

CBCC’s and Minasligas’ ACCs are

directly tied to their U.S. sales. With

respect to CBCC, we find that the

Department’s verifiers were able to tie

each ACC to a specific U.S. sale. See

July 22, 1996 verification report, pp. 14–

15. With respect to Minasligas, we note

that Minasligas is correct that, contrary

to petitioners’ argument, the value of the

ACC which Minasligas put on the

record does in fact equal the value of the

U.S. sale; therefore, we find that the

ACC is tied to the U.S. sale.

Furthermore, in prior verifications

(where negative U.S. imputed credit was

not an issue) the Department was able

to tie Minasligas’ ACCs to individual

U.S. sales. See July 22, 1996 verification

report, p. 9. Therefore, in the U.S.

imputed credit calculation in these final

results of review we have used as the

payment date the date on which the

bank credits the accounts of Minasligas

and CBCC with funds under the terms

of their ACCs.

Comment 14

Petitioners argue that the Department

erred by failing to deduct from RIMA’s

USP the ICMS tax that RIMA paid on its

foreign inland freight for U.S. sales.

RIMA argues that the freight amount

that it reported for each export sale

includes ICMS taxes.

Department’s Position

We agree with petitioners. Evidence

on the record indicates that RIMA

reported the ICMS tax on foreign inland

freight separately from the freight costs.

See October 3, 1996 verification report,

at 6. In these final results of review we

have deducted from USP the ICMS tax

due on freight.

Comment 15

Petitioners argue that the Department

erred in the calculation of Minasligas’

and RIMA’s COP by granting an offset

to production costs for the sale of byproducts. With respect to Minasligas,

they argue that the documentation

Minasligas submitted to demonstrate

that it had sold the slag during the POR

did not substantiate its claim.

Minasligas argues that its

documentation demonstrates that it

concluded the sale in June 1995, and

thus during the period covered by this

proceeding. It argues that only if the

Department decides to rely on the date

of shipment rather than the date of sale

should the adjustment apply to the fifth

review.

With respect to RIMA, petitioners

argue that RIMA failed to provide a

requested worksheet demonstrating its

computation of the claimed offset.

Furthermore, petitioners claim that the

volume of the offset that RIMA claimed

is inconsistent with other information

on the record.

RIMA argues that it did not calculate

or claim a by-product offset for its COP/

CV.

Department’s Position

We agree with petitioners. With

respect to Minasligas, we agree that the

documentation Minasligas submitted

does not demonstrate that the date of

sale for its claimed offset was during the

POR. See Minasligas’ October 15, 1996

submission, exhibit 5. Therefore, in

these final results of review we have not

allowed an offset to Minasligas’

production costs for its sale of slag.

With respect to RIMA, we find that the

record indicates that RIMA did offset its

production costs with revenue earned

from the sales of by-products, and that

RIMA did not substantiate its claim for

that offset. See RIMA’s April 30, 1996

SQR, at 33. Therefore, in these final

results of review we have not allowed

an offset to RIMA’s production costs for

its sales of by-products.

Comment 16

Petitioners argue that the Department

erred in its calculation of the by-product

offset that it applied to Eletrosilex’s

COM. It argues that the ICMS tax should

be deducted from the selling price in the

calculation of revenue earned from the

sale of the by-product.

Department’s Position

We agree with petitioners. The ICMS

tax represents a reduction in

Eletrosilex’s revenue earned from the

sale, and should be deducted from the

selling price in calculating total

revenue. We have done so in these final

results of review.

Comment 17

Petitioners argue that the Department

erred in its calculation of Eletrosilex’s

COP by using Eletrosilex’s calculation of

indirect selling expenses. That

calculation was flawed, petitioners

argue, because in it Eletrosilex divided

its indirect selling expenses by its

volume of production. This

methodology was incorrect, petitioners

argue, for two reasons. First, the selling

expense total used in the calculation

does not include the selling expenses of

Eletrosilex’s related affiliates. Thus,

petitioners argue, Eletrosilex allocated

to all of its silicon metal production

volume only part of the indirect selling

expenses that it and its related

companies incurred for selling the

silicon metal. Second, it is not the

Department’s practice, petitioners state,

to calculate selling expenses based on

production volume. Eletrosilex bore the

burden, petitioners argue, of reporting

properly calculated per-unit indirect

selling expenses, and failed to do so.

Therefore, petitioners conclude, in the

final results the Department should use

the facts available, and should calculate

Eletrosilex’s per-unit indirect selling

expenses for COP and CV by dividing

Eletrosilex’s reported indirect selling

expenses by its reported volume of

home market and U.S. sales.

Eletrosilex argues that it makes no

sense to calculate per-unit indirect

selling expenses based solely on U.S.

and home market sales volumes. It

argues that the indirect selling expenses

that Eletrosilex incurs (consisting

primarily of salaries and related

employee costs) are applicable to all

sales, not just to the local and U.S.

markets. These employees, Eletrosilex

states, perform functions relevant to all

sales, and it would be unfair and

illogical to apply the expenses of these

employees solely to home market and

U.S. sales. Citing statements in its

questionnaire response as support, it

argues that sales both in the United

States and in Brazil are made solely by

Eletrosilex personnel, with no

assistance from affiliated companies.

Furthermore, Eletrosilex argues, while

affiliated companies assist Eletrosilex in

some third-country markets, Eletrosilex

personnel are deeply involved in all

aspects of these sales. That there is some

external assistance on these sales in

third-country markets, Eletrosilex

argues, is not relevant to the

determination of per-unit indirect

selling expenses in the home market.

Department’s Position

We agree with petitioners that

indirect selling expenses should be

calculated based on sales volumes, and

not production volumes. This is our

policy because by their nature indirect

selling expenses are attributable to sales
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of merchandise, and not to production

of merchandise. We do not agree with

petitioners that the computation needs

to include the indirect selling expenses

of all of Eletrosilex’s affiliates because

COP includes only the indirect selling

expenses attributable to home market

sales. Because the related affiliates were

not associated with Eletrosilex’s home

market sales, there is no reason to

include their indirect selling expenses

in COP. In these final results of review,

we have calculated Eletrosilex’s indirect

selling expenses by dividing its home

market indirect selling expenses by its

home market sales volumes.

Comment 18

Petitioners argue that the Department

erred in the calculation of Eletrosilex’s

and RIMA’s U.S. selling prices by

calculating the unit price based on the

net weight of contained silicon rather

than the gross weight of the silicon

metal. They argue that in a CV-based

margin calculation the Department

should use the gross weight of the

silicon metal to calculate the per-unit

USP because CV is reported on a grossweight basis. Use of the containedweight quantities would, they allege,

distort the comparison of export price

(EP) and NV. Similarly, petitioners

argue that the Department erred in its

sales-below-cost analysis for RIMA by

calculating its home market selling

prices on the basis of the contained

weight of silicon, rather than the gross

weight of the silicon metal. They argue

that to make a fair comparison, the

Department should convert the per-unit

home market selling prices to a grossweight basis before comparing them to

COP.

RIMA argues, with respect to

petitioners’ argument concerning the

comparison of USP and NV, that

petitioners’ argument is tantamount to a

request that the Department determine a

USP for its sales on a different basis

than that at which the merchandise was

sold to the U.S. market. Doing so, RIMA

argues, would be contrary to the plain

language of the statute, which requires

that the Department base EP on ‘‘the

price at which the subject merchandise

is first sold (or agreed to be sold) before

the date of importation by the producer

or exporter of the subject

merchandise. . .’’ (See 19 U.S.C.

§ 1677a(a).) The petitioners’ approach,

RIMA argues, would result in using a

unit price different from that reflected

on the invoice, and, therefore, would be

contrary to the statute.

Department’s Position

We disagree with petitioners. We find

no evidence on the record to support

petitioners’ contention that the weights

Eletrosilex and RIMA reported for their

U.S. and home market sales reflect only

the weight of the silicon, rather than the

weight of the silicon metal.

Furthermore, there is no record

evidence to support petitioners’

assertion that CV was calculated on a

gross-weight basis. Therefore, there is

no reason to change the per-unit

calculations from those in the

preliminary results of review.

Comment 19

Petitioners argue that Eletrosilex

failed to provide a reconciliation of its

COM to its inventory cost records.

Eletrosilex attempted to provide a

reconciliation in its questionnaire

response (Q/R), but in an SQR

acknowledged that the previously

submitted reconciliation contained an

error. Therefore, in the SQR Eletrosilex

submitted a revised reconciliation. This

second reconciliation contained

beginning and ending inventory values

that were different from those contained

in the Q/R. Thus, in a second

supplemental questionnaire, the

Department requested that Eletrosilex

explain why it reported two different

inventory balances based on the same

inventory records. Eletrosilex answered

that ‘‘because inventory unit costs are

calculated by the weighted average

methodology rather than purely by

quantities, the inventory balance

necessarily changes when there is a

change in values.’’ This statement,

petitioners argue, shows that Eletrosilex

did not reconcile its reported COM to its

inventory records maintained in the

normal course of business, but instead

simply compared its reported monthly

COMs to inventory values that it created

from its monthly COMs prepared for

this review. Thus, petitioners argue,

Eletrosilex failed to provide a critical

reconciliation needed to validate its

reported COM.

Department’s Position

We disagree with petitioners. In its

SQR, Eletrosilex provided information

which substantiated that the reported

per-unit costs could be reconciled to the

financial statement costs. Eletrosilex

provided the financial statement average

inventory values for each month of the

POR, as well as financial statements. We

reviewed and analyzed the cost

information, the monthly inventory

information, and the financial

statements which Eletrosilex submitted.

Since Eletrosilex produces only subject

merchandise, we multiplied the

submitted costs by the production

quantities and compared the total costs

to the financial statement total costs. We

determined that the reported per-unit

COP and CV data were consistent with

the per-unit costs used in the financial

statements.

Comment 20

Petitioners argue the Department

erred in its computation of CBCC’s COP

by using the depreciation expenses that

CBCC reported. They find three errors in

CBCC’s reported depreciation. First,

CBCC calculated its reported

depreciation by aggregating its

depreciation for all assets and allocating

the aggregate amount to the three

products it produces based on the

relative production quantities of these

products. Petitioners state that the

Department’s normal practice (which,

petitioners allege, was CBCC’s normal

methodology prior to the 93–94

administrative review) requires that

depreciation of assets used to produce

subject merchandise be directly

attributed to the cost of the subject

merchandise. Petitioners object to

CBCC’s new allocation because it is not,

they allege, how CBCC has historically

recorded depreciation in its books or

reported to the Department in earlier

reviews of this order. Petitioners argue

that the Department’s practice is clear

that a respondent may not depart from

its normal, historical cost allocation

methods during an antidumping

proceeding unless the respondent

establishes that its normal method is

distortive. See Canned Pineapple Fruit

from Thailand, Final Determination of

Sales at Less than Fair Value, 60 FR

29553, 29559 (June 5, 1995). Here,

petitioners argue, CBCC has not even

claimed that its prior method was

distortive.

The effect of CBCC’s new calculation

methodology, petitioners argue, is to

shift CBCC’s depreciation away from

silicon metal and toward other

products. To accept such a calculation,

petitioners argue, would violate the

Statement of Administrative Action

(SAA) which states that ‘‘if Commerce

determines that costs ... have been

shifted away from production of the

subject merchandise, or the foreign like

product, it will adjust costs

appropriately, to ensure they are not

artificially reduced.’’ See SAA, 1994

U.S.C.A.A.N. at 4172.

For the above reasons, petitioners

argue that the Department should:

• Include in COM the depreciation

for assets used to make silicon metal,

consistent with CBCC’s historical

depreciation method;

• Allocate depreciation for equipment

common to production of multiple

products based on the percentage of
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CBCC’s total furnace capacity dedicated

to production of each product;

• Allocate depreciation for equipment

common to production of multiple

products for a particular plant only

among the products made at that

facility;

• Calculate the proper amount of

straight-line depreciation for the

furnaces that produce silicon metal

based on the monthly acquisition values

for those furnaces.

The second alleged error petitioners

find in CBCC’s calculation of

depreciation is that it did not include

depreciation for all idle equipment.

The third alleged error petitioners

find in CBCC’s calculation of

depreciation is that CBCC used

accelerated depreciation for some assets.

Petitioners state that the Department

consistently rejects accelerated

depreciation, which by definition is not

based on the average useful life of the

fixed assets. Therefore, petitioners

argue, the Department should

recalculate CBCC’s depreciation

eliminating any prior accelerated

depreciation. It should also, petitioners

argue, restate the value of the assets to

account for hyperinflation.

CBCC argues, with respect to the first

alleged error, that though its

methodology represents a change from

the first and second reviews of this

order, it is the same methodology it

used in the third (93–94) review.

Moreover, CBCC argues, it used this

depreciation allocation method also

with respect to production equipment

common to all production in

Ferrosilicon from Brazil; Final

Determination, and the Department

accepted it. Therefore, CBCC states, its

current methodology has been

historically used, and the Department

has accepted it in one prior instance.

Furthermore, CBCC argues, the

methodology is proper because CBCC

can produce any of its products in each

furnace, with only minor modifications.

Therefore, allocating depreciation to

each product based on relative

production capacity is not improper.

CBCC argues, with respect to the

second alleged error, that it was

pursuant to Brazilian law that it did not

report depreciation of idle assets. Under

Brazilian law, it states, the depreciation

of idle assets is illegal. Under such

circumstances, it argues, depreciation is

suspended and resumes only when the

assets are operational again.

CBCC argues, with respect to the third

alleged error, that the Department

verified at the fourth review verification

that there was no accelerated

depreciation of furnaces. Furthermore,

had accelerated depreciation occurred

in any prior review, CBCC argues, the

Department verifiers would have noted

it. Therefore, CBCC concludes, there is

no evidence on the record to support

petitioners’ theories. With regard to

petitioners’ argument that the

Department should restate the value of

the assets to account for hyperinflation,

CBCC argues that it calculated

depreciation on asset values that were

re-actualized to take account of

inflation.

Department’s Position

We agree with petitioners in part. We

have determined that CBCC’s new

method of calculating depreciation

distorts the cost of depreciation

incurred to produce silicon metal

because it shifts depreciation costs

incurred in the production of silicon

metal away from that product and

toward other products. For this reason,

accepting this method would be

contrary to the guidance set forth in the

SAA. Since publication of the

preliminary results of this review, we

have requested and obtained

information from CBCC that enables us

to identify the depreciation expense

associated with assets used to produce

silicon metal and to include that

expense as part of the COP/CV for

silicon metal.

Concerning depreciation expenses for

idle assets, we agree with petitioners

that it is our clearly stated practice and

policy to include these in COP/CV.

Accordingly, for these final results, we

have included this category of expense

in the calculation of depreciation.

Petitioners’ allegation that CBCC

improperly used accelerated

depreciation expenses is moot for these

final results because, as stated above, we

have performed a recalculation of

depreciation. In this recalculation we

have not accelerated the useful lives of

the assets. For the furnaces we have

used a useful life of ten years, which is

the useful life we used in prior reviews

of this order. By using the same useful

life in successive reviews, we avoid

accounting for the same costs more than

once. See our position on comment 4

above.

Comment 21

Petitioners argue that the Department

erred in its calculation of CBCC’s COP

by using CBCC’s reported direct labor

costs. They argue that the figures CBCC

reported reflect a methodology which

distorts costs. As a result of this

methodology, petitioners argue, CBCC

reported disproportionate direct labor

costs for products with comparable

direct labor requirements. CBCC also,

petitioners argue, allocated direct labor

costs to furnaces that were not even

operating, and thus required no direct

labor. Therefore, petitioners argue that

the Department should recalculate

direct labor correctly, or use facts

available for CBCC’s direct labor.

CBCC argues that its direct labor costs

for this review were taken directly from

its books and accounting records, which

the Department verified. CBCC believes

that its allocation and accounting

methodology are justified based on how

its labor is in fact employed and how it

records the cost of labor in its books.

CBCC explains that it assigns a set

number of workers to each furnace, no

matter what the output of the furnace

may be. When a furnace is inoperative

or idle, the workers and employees

continue to be paid and are generally

not reassigned to other furnaces because

the cost of laying off employees for

temporary periods of time would be

prohibitive. Furthermore, all furnaces

operate 24 hours a day, and therefore it

would be impracticable and

unnecessary to add employees in

addition to those already assigned to

other furnaces. As a result, CBCC

allocated these labor costs to the

product which the idle furnace

produced before becoming nonoperational. Under these circumstances,

CBCC argues, the evidence on the

record, which the Department verified,

shows that the workers assigned to idle

furnaces continued to be paid, and that

CBCC continued to account for this

labor in its accounting records based on

the volume of silicon metal produced by

each furnace while it was active.

Department’s Position

We agree with petitioners that CBCC’s

reported labor costs distort the actual

labor costs incurred to produce silicon

metal because the company allocates a

disproportionate share of labor costs to

products that have comparable labor

requirements and because it allocates

labor costs associated with idle furnaces

to specific products that are not in

production at the time the labor costs

were incurred. Although CBCC used

this method in its normal accounting

system, we cannot use it in our

antidumping analysis. The SAA

indicates that costs will be calculated

based on records kept by a firm if they

are kept in accordance with GAAP and

if they reasonably reflect the costs

associated with the production and sale

of the merchandise.

This is not the case with respect to

CBCC’s accounting for the labor costs

associated with idle furnaces. Under

CBCC’s accounting, the company

charges these costs to the last product

produced in the furnace. We believe
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that it is more appropriate to allocate

these costs to all products produced by

CBCC since, during the idle time, the

labor costs incurred are not directly

related to any specific product.

Comment 22

Petitioners argue that the Department

erred in its calculation of CBCC’s COP

by using the forest exhaustion costs that

CBCC reported. CBCC’s reported forest

exhaustion costs were deficient,

petitioners argue, because in them CBCC

revalued the formation and pre-harvest

maintenance costs of each forest project

only up to the date that harvesting

began for that project. Petitioners argue

that in Ferrosilicon from Brazil; Final

Determination the Department found

that CBCC had used the same

methodology, and determined that

because of it CBCC ‘‘had substantially

understated its cost of producing

charcoal by inaccurately recording the

costs associated with their wood

forests.’’ (See Ferrosilicon from Brazil;

Final Determination, at 738.) Petitioners

argue that in this review the Department

should require CBCC to recalculate its

self-produced charcoal costs using forest

exhaustion based on forest formation

and pre-harvest maintenance costs that

have been revalued to account for

inflation during the harvest period. In

the alternative, petitioners argue, the

Department should determine CBCC’s

charcoal costs based on the facts

available.

CBCC argues that it explained its

reporting of exhaustion to Department

officials at the verification, and that the

verifiers fully verified this question. It

notes too that the exhaustion costs are

re-stated in UFIR to account for

hyperinflation, and that they include all

taxes and expenses attributable to

exhaustion.

Department’s Position

We agree with petitioners that

because CBCC did not revalue the cost

of its forests after harvesting began, the

charcoal costs it submitted are

inadequate. Therefore, in these final

results of review we have valued

CBCC’s self-produced charcoal at the

price paid to outside suppliers. Under

these circumstances we resorted to this

same cost methodology in the first and

second administrative reviews of this

order. See Silicon Metal from Brazil;

First Review Final Results at 42809 and

page 1 of the attachment to the March

14, 1995 analysis memorandum from

Fred Baker to the file (public version).

Comment 23

Petitioners argue that the Department

erred by allocating CBCC’s indirect

selling expenses according to the

relative sales volume of each of CBCC’s

three products. Petitioners argue that

this is not a proper allocation because

silicon metal has a significantly higher

value than CBCC’s other two products.

Furthermore, petitioners argue that the

Department should use adverse facts

available for CBCC’s indirect selling

expenses because at the verification the

Department requested information on

CBCC’s sales values for each of its

products in order to allocate indirect

selling expenses to silicon metal based

on sales values rather than sales

volumes, but CBCC refused to provide

that information. The verification report

states that the basis for the refusal was

that the Department had not requested

the information prior to the verification.

Petitioners argue that this reason is

inadequate because CBCC did not state

that the information was unavailable.

CBCC states that at the verification the

Department officials suggested that

CBCC recalculate the indirect selling

expenses on the spot using a different

methodology than that it requested in

the supplemental questionnaire. CBCC

states that at the verification it did not

have the time or resources to provide an

entirely new set of indirect selling

expenses. It also notes that the

Department’s officials did not suggest

providing this information to the

Department at a later date. Accordingly,

CBCC argues, the Department should

not penalize CBCC for the Department’s

failure to request information other than

the information requested in its

questionnaires. See Toyota Motor Sales

U.S.A. v. United States, Slip Op. 96–95,

June 14, 1996; Micron Technology, Inc.

v. United States, Slip Op. 95–107, June

12, 1995.

Department’s Position

We disagree with petitioners.

Petitioners have given us no reason to

believe that an allocation based on sales

volume is unreasonable or distortive in

this case. That silicon metal may have

a higher sales value than other products

CBCC produces is an insufficient basis

to conclude, absent any supporting

information on the record of this review

regarding the specific nature of the

indirect selling expenses incurred by

CBCC, that an allocation based on sales

value would produce more accurate

results than an allocation based on sales

volume. Therefore, in these final results

of review, as in the preliminary results

of review, we have allocated CBCC’s

indirect selling expenses to silicon

metal based on relative sales volume.

Comment 24

Petitioners argue the Department

erred in its calculation of CBCC’s G&A

expenses by not allocating to CBCC a

portion of the G&A expenses of CBCC’s

direct Brazilian parent, Solvay do Brasil,

but instead it allocated to CBCC a

portion of the G&A expenses of only its

Belgian parent, Solvay & Cie. Petitioners

argue that in the less-than-fair-value

(LTFV) investigation of this case CBCC

acknowledged that Solvay do Brasil

performed some services on CBCC’s

behalf, and that in this review CBCC has

not stated that Solvay do Brasil did not

do the same. Therefore, petitioners

argue, the Department should calculate

the portion of Solvay do Brasil’s G&A

expenses that is attributable to CBCC,

and include those expenses in CBCC’s

COP and CV.

CBCC argues that the consolidated

financial statements of Solvay & Cie

include the financial results of Solvay

do Brasil as well as CBCC and some two

dozen other affiliated companies in the

Solvay Group. Thus, by calculating G&A

expenses on the basis of the

consolidated statements of the Solvay

Group, CBCC argues, not only did the

Department allocate G&A expenses

incurred by Solvay do Brasil on behalf

of CBCC, but also those of a number of

companies throughout the world that

did not perform any administrative

services whatsoever for CBCC.

Department’s Position

We agree with the respondent that the

allocation of its overall parent

company’s G&A expenses was correct

and that to also add the G&A expenses

of Solvay do Brazil would double-count

the G&A expenses of Solvay do Brazil,

which are included in the consolidated

financial statements. Accordingly, for

these final results we have continued to

apply the consolidated G&A expenses

reported by CBCC.

Comment 25

Petitioners argue that the Department

erred in its calculation of CBCC’s

interest expense by calculating it on the

basis of the interest expense of CBCC’s

ultimate Belgian parent, Solvay & Cie.

They argue that the Department should

instead calculate it on the basis of the

combined interest expense of CBCC and

its Brazilian parent, Solvay do Brasil. In

support of their argument, they point

out that there is evidence on the record

that there are loans between Solvay do

Brasil and CBCC, whereas there is no

evidence on the record that there are

any intercompany transactions or

borrowing between CBCC and Solvay &

Cie. Furthermore, they argue that the
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Brazilian firms normally would borrow

in Brazilian credit markets or from

Brazilian banks. Moreover, in the final

results of the first administrative review

of this order, and in Ferrosilicon from

Brazil; Final Determination, the

Department used the financial

statements of Solvay do Brasil to

calculate CBCC’s interest expenses.

CBCC argues that the Department’s

well-established practice is to calculate

financial expenses based on the

consolidated statements at the parent

company level. See Ferrosilicon from

Brazil; Final Determination at 736. In

prior segments of this proceeding the

Department consolidated the financial

expenses of CBCC and Solvay do Brasil

because CBCC had not submitted the

consolidated financial statements of its

Belgian parent, Solvay & Cie. In this

review CBCC provided such

consolidated financial statements. They

show, CBCC states, that the financial

results of both CBCC and Solvay do

Brasil are consolidated with those of the

Solvay Group. Therefore, CBCC argues,

it is proper for the Department to use

these consolidated financial statements

pursuant to its ‘‘well-established

practice of deriving net financial costs

based on the borrowing experience of

the consolidated group of companies.’’

See New Minivans from Japan, 57 FR

21937, 21946 (May 26, 1992).

Department’s Position

We agree with CBCC. Both parties

urge the Department to use interest

expenses reflecting the consolidated

financial results of the parent and its

subsidiaries. However, the petitioners

would have us refer only to the financial

results of CBCC and its immediate

Brazilian parent, while CBCC would

have us use the global corporate interest

expense. The petitioners’

recommendation is internally

inconsistent because, while they state

that Department policy is to use fully

consolidated results, they urge us to rely

on only partially consolidated results

(those of CBCC and Solvay do Brasil).

Our policy is to base interest expenses

and income on consolidated financial

statements. We explained our basis for

this position in Silicon Metal from

Brazil; First Review Final Results as

follows:

Since the cost of capital is fungible, we

believe that calculating interest expense

based on consolidated statements is the most

appropriate methodology. (see, e.g., Final

Determination of Sales at Less Than Fair

Value, Small Business Telephones from

Korea, 54 FR 53141, 53149 (December 27,

1989), Final Results of Antidumping Duty

Administrative Review, Brass Sheet and Strip

from Canada, 55 FR 31414, 31418–13418–

13419 (August 2, 1990), and Final

Determination of Sales at Less Than Fair

Value, Antifriction Bearings (Other than

Tapered Roller Bearings) and Parts Thereof

from the Federal Republic of Germany, et al.,

54 FR 18992, 19074 (May 3, 1989)).

See Silicon Metal from Brazil; First

Review Final Results at 42807. Also see

Ferrosilicon from Brazil; First Review

Final Results at 59412.

While we did use the consolidated

financial statement of CBCC and Solvay

do Brasil in prior reviews of this order

and in Ferrosilicon from Brazil; Final

Determination, in those segments of the

proceeding we did not have the

consolidated statement of Solvay & Cie

on the record. Accordingly, for these

final results of review, we have used the

consolidated financial statement of

Solvay & Cie for the interest expense.

Comment 26

Petitioners argue that the Department

erred in its calculation of CBCC’s and

RIMA’s USP by adding to it the

weighted-average amount of ICMS, PIS,

and COFINS taxes reported for home

market sales. They argue that this

addition was improper because under

the recent amendments to the

antidumping law, the Department is to

make no addition to USP for home

market taxes. Rather, they argue, when

based on home market prices, the

Department should reduce NV by:

[t]he amount of any taxes imposed directly

upon the foreign like product or components

thereof which have been rebated, or which

have not been collected, on the subject

merchandise, but only to the extent that such

taxes are added to or included in the price

of the foreign like product. . . .

See 19 U.S.C. § 1677b(a)(6)(B)(iii).

Furthermore, petitioners argue that

under this provision, the Department

may not reduce NV by the amount of

PIS and COFINS taxes reported for

home market sales because they are

gross revenue taxes. Thus, they are not

‘‘imposed directly upon the foreign like

product,’’ as required under the statute

in order to deduct them from NV.

CBCC argues that the recent

amendments to the U.S. antidumping

laws require the Department to use taxneutral methodologies for its dumping

calculations. Accordingly, CBCC argues,

it is proper for the Department to add to

USP the weighted-average amount of

ICMS, PIS, and COFINS taxes imposed

on domestic sales because, by adding

the same amount of taxes to the USP as

that collected on the home market sales,

the Department makes ‘‘apples-toapples’’ comparisons.

CBCC also argues that, even though

the PIS and COFINS taxes are gross

revenue taxes, this does not mean ‘‘they

are not imposed directly upon the

foreign like product,’’ as petitioners

allege. Whether or not they are shown

as a separate line item on the invoice is

immaterial, CBCC argues, as long as

they are embedded or included in the

price of the sale. Furthermore, CBCC

argues, the CIT has upheld the

Department’s practice of making an

adjustment for taxes embedded in sales

prices. See Daewoo Electronics Co., Ltd.

v. International Union of Electronic,

Electrical, Technical, Salaried and

Mach. Workers, AFL–CIO, 6 F.3d. 1511,

1516–17 (Fed. Cir. 1993). Moreover,

CBCC argues that the PIS and COFINS

taxes meet the two requirements of 19

U.S.C. § 1677b(a)(6)(B)(iii) (quoted

above). First, PIS and COFINS taxes are

imposed on gross home market sales

revenue of silicon metal, but are not

‘‘collected’’ on export sales. Second,

although PIS and COFINS taxes are not

shown as a separate line item on the

invoice, they are ‘‘included’’ in that

price because they are embedded in

such price.

RIMA argues that the Department

should be guided by the principle of tax

neutrality that it re-stated in the final

results of Silicon Metal from Brazil;

Second Review Final Results.

Accordingly, RIMA argues, the

Department should add to the USP the

absolute amount of ICMS taxes as well

as the absolute amounts of PIS/COFINS

taxes collected on home market sales,

pursuant to 19 U.S.C. § 1677a(c)(2)(B),

19 U.S.C. § 1677b(a)(6)(B)(iii), and 19

U.S.C. § 1677b(a)(6)(C)(iii). To add ICMS

and PIS/COFINS taxes to NV without a

corresponding adjustment to the USP,

RIMA argues, would create dumping

margins due solely to indirect taxes

where none would otherwise exist.

Minasligas argues that the Department

erred by failing to deduct from NV the

PIS, COFINS, and ICMS taxes due on

Minasligas’ home market sales.

Minasligas argues that this failure was a

violation of 19 U.S.C. 1677b(6)(B)(iii),

cited above. Minasligas argues, with

respect to the PIS and COFINS taxes,

that because these taxes are not

collected on export sales, they must be

deducted from NV prior to the

comparison to USP. As for the ICMS tax,

Minasligas argues that under the statute

the Department must deduct from NV

the amount by which the home market

ICMS tax due exceeds the amount of

ICMS tax due on U.S. sales. This

deduction is necessary, Minasligas

argues, to account for the difference in

ICMS tax which has been rebated or not

collected upon exportation, as directed

in 16 U.S.C. 1677b(6)(B)(iii).

Minasligas also argues that, in the

alternative, if the Department does not
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deduct the PIS, COFINS, and the correct

amount of ICMS taxes from NV, then, in

the alternative, it must add the absolute

amount of these taxes to USP in order

to achieve tax neutrality. As another

alternative, Minasligas argues that the

Department should make a

circumstance-of-sale (COS) adjustment

for the tax differential by deducting

from the NV the absolute amount of the

tax difference between USP and NV.

Petitioners argue that the Department

was correct in adding the PIS and

COFINS taxes to Minasligas’ home

market sales prices because it had

reported its home market prices net of

these taxes, and thus understated the

gross unit prices. Therefore, petitioners

argue, the Department must add the PIS

and COFINS taxes to Minasligas’ home

market prices in order to determine the

actual prices that Minasligas charged,

which are the proper starting point for

the calculation of NV. Furthermore,

petitioners argue, under section

773(a)(6)(B)(iii) of the Act, NV may be

reduced only by taxes imposed directly

upon the ‘‘foreign like product or

components thereof.’’ Petitioners argue

that because the PIS and COFINS taxes

are calculated based on gross receipts

(excluding receipts from export sales),

they are not imposed ‘‘directly upon the

foreign like product,’’ and therefore may

not be deducted from NV.

Moreover, petitioners argue that in

similar situations in the past the

Department has not made an adjustment

for gross revenue taxes. In support of

this argument they first note that the

language of 19 U.S.C. 1677b(6)(B)(iii) is

virtually identical to the language of

772(d)(1)(C), which was, they state, the

parallel provision in effect prior to the

enactment of the URAA, and which

provided for an upward adjustment to

USP. They then note that in Silicon

Metal from Argentina the Department

determined that two Argentine taxes

(which petitioners allege are almost

identical to Brazil’s PIS and COFINS

taxes) did not qualify for an adjustment

to USP because they were gross revenue

taxes. See Silicon Metal from Argentina,

Final Determination of Sales at Less

Than Fair Value, 56 FR 37891, 37893

(August 9, 1991).

Petitioners also argue that the PIS and

COFINS taxes do not qualify for a COS

adjustment pursuant to 19 U.S.C.

§ 773(a)(6)(C)(iii) for the same reason

that they do not qualify for an

adjustment to NV pursuant to 19 U.S.C.

§ 773(a)(6)(B)(iii) of the Act. The

Department’s regulations specify that

the Department will limit allowances for

differences in the circumstances of sales

‘‘to those circumstances which bear a

direct relationship to the sales

compared.’’ See 19 CFR § 353.56(a)(1).

Petitioners argue that because PIS and

COFINS taxes are not imposed on

silicon metal transactions, but instead

are assessed on gross receipts from

operations, they are not directly related

to specific sales and therefore do not

qualify for a COS adjustment.

Department’s Position

We agree with petitioners that recent

changes to the antidumping law make

no allowance for additions to USP for

home market taxes. Thus, to achieve tax

neutrality in these final results of

review, we have deducted relevant taxes

from NV, and have not added them to

USP. This approach in is accordance

with 19 U.S.C. § 1677b(a)(6)(B)(iii).

However, we agree with Minasligas that

in order to achieve tax neutrality with

respect to the ICMS tax we should

deduct from NV only the amount of the

difference between ICMS tax due on

home market sales and ICMS tax due on

U.S. sales. We have done so in these

final results of review.

We also agree with petitioners that

information on the record demonstrates

that the PIS and COFINS taxes are taxes

on gross revenue exclusive of export

revenue. Thus, in accordance with our

determination in Silicon Metal from

Argentina, we determine that these

taxes are not imposed ‘‘directly upon

the merchandise or components

thereof.’’ Thus, we have no statutory

basis to deduct them from NV. We also

agree with petitioners that because the

PIS and COFINS taxes are gross revenue

taxes, they do not bear a direct

relationship to the sales, and therefore

do not qualify for a COS adjustment.

Therefore, in these final results of

review we have not made an adjustment

for PIS and COFINS taxes in the margin

calculation.

Comment 27

Petitioners argue with respect to all

respondents that the Department should

include profit in CV, and that the

foreign like product that should be

excluded from the profit calculation as

outside the ordinary course of trade

includes sales disregarded as below

cost, sales of off-quality merchandise,

and sales to related parties at prices that

are not at arm’s length.

Department’s Position

We agree that the calculation of CV

should include profit. Where we used

CV in the margin calculation in these

final results of review and the

respondent had above-cost sales, we

have calculated profit based on abovecost home market sales of commercialgrade silicon metal sold at arm’s length

prices. Where a respondent had no

above-cost sales, but its financial

statement indicates that it had profits,

we based the profit calculation on the

respondent’s financial statement. Where

a respondent had no above-cost sales

and its financial statement indicated the

company experienced losses rather than

profits during the calendar year, we

have calculated profit based on the

weighted-average profit ratios of other

respondents who reported profits on

their financial statements.

Comment 28

Petitioners argue that the Department

erred in its calculation of RIMA’s COP

by using incorrect figures for

depreciation. The figures the

Department used were depreciation

expenses that RIMA submitted to the

Department at verification. (Subsequent

to publication of the preliminary results

the Department solicited additional

information from RIMA regarding its

depreciation. Petitioners submitted

separate comments regarding that

information, as described below.)

Petitioners argue regarding RIMA’s

original depreciation figures that the

reported depreciation is massively

understated. As support for this

assertion, they cite the independent

auditor’s report accompanying RIMA’s

1994 and 1995 financial statements.

These reports give the independent

auditor’s opinion as to what RIMA’s

depreciation and amortization would be

if RIMA recognized them on their

financial statements. Comparing the

independent auditor’s estimate of

depreciation with those submitted by

RIMA for this review, petitioners

argued, shows that the numbers given

by the independent auditors are much

higher than those given by RIMA in this

review.

Furthermore, petitioners argued that

RIMA’s depreciation calculation is

flawed in numerous ways. Among them:

1. Its calculation of the purported

company-wide depreciation for all its

products included only depreciation for

machinery and equipment at its Varzea

da Palma (VZP) plant, and thus

excluded the depreciation for the

machinery and equipment at the other

plants;

2. It is based on an accelerated

depreciation rate. Petitioners argue that

it is the Department’s practice to reject

accelerated depreciation of assets where

such accelerated depreciation fails to

allocate the cost of the asset on a

consistent basis over the life of the asset.

3. RIMA’s 1995 audited financial

statements reported fixed asset values

for buildings, vehicles, furniture, and

implements, while RIMA’s depreciation
1984 Federal Register / Vol. 62, No. 9 / Tuesday, January 14, 1997 / Notices

worksheets prepared for this review do

not reflect depreciation for these assets.

4. RIMA’s depreciation worksheets do

not appear to contain line items for

amortization of its deferred expenses,

which were incurred to set up, expand,

and modernize RIMA’s production

facilities and to develop new plants.

Moreover, petitioners argue that

RIMA improperly changed its

depreciation calculation method since

the preceding review. The 93–94

verification report says:

Since each piece of equipment was

dedicated to the production of certain

products, RIMA reported the depreciation

expense from the cost center for silicon

metal. RIMA allocated the remaining

overhead expenses øincluding depreciation¿

based on the relative number of hours

worked on silicon metal production versus

total hours worked on all products.

See Verification Report, October 25,

1995, p. 19 (public version). In the 94–

95 review, petitioners allege, RIMA

departed from this methodology by

calculating company-wide depreciation

and allocating it to products based on

the relative cost of sales of the products.

Department practice requires that

respondents show that their historicallyused method is distortive before they

can use a new method. RIMA,

petitioners allege, made no such

showing.

Finally, petitioners argue that RIMA

performed an improper allocation of its

depreciation which resulted in

depreciation for some equipment used

exclusively for silicon metal being

allocated to other products. Moreover,

they argues that where allocation of

depreciation is appropriate, RIMA’s

allocation, which was based on cost of

sales, is improper because cost of sales

does not reflect the extent to which

assets were used to produce individual

products during a period. This is

because cost of sales excludes the cost

of inventory production and includes

the cost of products sold out of

inventory.

For the above reasons, petitioners

argue that the Department should obtain

the necessary information to calculate

RIMA’s depreciation properly, or, in the

alternative, it should calculate RIMA’s

depreciation based on the facts

available.

In response to petitioners’ comments

regarding its original calculation of

depreciation, RIMA argues that

petitioners base their comments on

incorrect assumptions or on a

fundamental misunderstanding of

RIMA’s depreciation calculations. RIMA

argues that while it is true that the

independent auditor’s estimate of

depreciation is different from RIMA’s,

the difference is accounted for by the

fact that the independent auditor’s

estimate is a cumulative figure

representing depreciation that has

occurred since RIMA stopped recording

depreciation on its financial statement

(which has been at least five years),

whereas the depreciation RIMA

reported to the Department is the

depreciation only for the POR. RIMA

also state that petitioners were mistaken

regarding the number of RIMA’s plants

that produce silicon metal, and thus are

mistaken in their own estimate of what

RIMA’s allocated silicon metal

depreciation should be.

Furthermore, RIMA states that

petitioners have made several other

errors in their analysis. First, RIMA

argues that because petitioners have

misread the verification exhibit showing

the calculation of depreciation, they are

in error in stating that the reported

depreciation takes account only of the

VZP plant’s equipment. In fact, RIMA

states, it included eight items in its

depreciation worksheet, including

deferred expenses and categories of

equipment other than equipment at the

VZP plant. Second, RIMA states that the

depreciation of the assets takes into

account the effect of hyperinflation

because the acquisition values of such

assets are stated in UFIR, which are then

converted into local currency for the

months concerned. Third, petitioners

were incorrect, RIMA argues, in saying

that its depreciation methodology is a

change from prior reviews. In fact,

RIMA argues, it is the same calculation

methodology used in Silicon Metal from

Brazil; Second Review Final Results,

which the Department accepted.

Finally, RIMA argues that the

Department verifiers noted nothing

unusual or incorrect in RIMA’s

depreciation calculations. Therefore,

RIMA concludes, the Department

should rely on these findings.

On November 14, 1996 the

Department solicited additional

information from RIMA. We requested

that RIMA submit depreciation

expenses that tied to the auditor’s

statements, and which should consist of

the sum of the depreciation expenses for

assets only associated with the

production of silicon metal and an

allocated portion of the depreciation

expenses for other, common assets. In

its response, in addition to providing

information, RIMA reiterated that the

auditor’s stated depreciation amounts

should not be used as a basis for the

analysis because the auditors did not

consider whether RIMA’s assets had

been fully depreciated when they

calculated the estimated depreciation

expenses for the years reported in the

financial statement. RIMA argued that

this methodology overstates

depreciation significantly because

during the normal course of business,

every year, assets become fully

depreciated and, therefore, cannot be

used as a basis for determining

depreciation expenses.

In commenting on RIMA’s response to

the Department’s November 14, 1996

supplemental questionnaire, petitioners

stated that RIMA’s new response was

deficient. Petitioners state that RIMA

did not respond to the Department’s

request for information on the

replacement cost for silicon metal assets

or for depreciation expenses for silicon

metal assets. Because RIMA allegedly

failed to respond to the Department’s

request for information, petitioners

argue that the Department should use

facts available for RIMA’s depreciation.

Department’s Position

We agree with petitioners that both

RIMA’s initial depreciation calculation

and the depreciation calculation

submitted in response to the

Department’s November 14, 1996

supplemental questionnaire were

deficient. As petitioners point out,

RIMA’s original calculation did not

include all assets, and therefore is

understated. Furthermore, RIMA’s

response to the Department’s November

14, 1996 submission did not respond to

all the Department’s requests for

information. Rather than providing

requested information, RIMA calculated

depreciation in a way not in conformity

with the Department’s instructions.

Without the requested information the

Department cannot properly determine

RIMA’s depreciation expenses during

the POR.

Where a respondent has not

responded to a request for information,

the Department may resort to facts

available. As facts available the

Department has chosen to use one-half

of the audited total RIMA depreciation

expenses for each fiscal year as RIMA’s

total POR depreciation expenses, and to

allocate to silicon metal production a

share of that total based on the highest

monthly percentage of cost of goods

sold accounted for by silicon metal, as

appearing in verification exhibit OH1.

We allocated one-twelfth of this total, in

turn, to each month of the POR.

Comment 29

Petitioners argue that the Department

erred in its calculation of RIMA’s COP

by using RIMA’s reported cost for its

self-produced charcoal. RIMA reported

the price of charcoal from unrelated

suppliers, and said it was reflective of

the fair market value for charcoal.
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Petitioners argue that this claim would

be relevant if RIMA had acquired

charcoal from related suppliers, but this

is not the case; RIMA produced the

charcoal itself. Thus, petitioners argue,

prior to the final results the Department

must obtain RIMA’s full cost of

producing charcoal (including all

operating and materials costs and

depreciation and amortization) or use

facts available.

In addition, petitioners argue that at

the verification in this review RIMA

revealed for the first time that one of its

plants produced quartz, a major input

for the production of silicon metal.

Petitioners argue that for the same

reasons as given above with respect to

charcoal, the Department must either

obtain RIMA’s full cost of producing

quartz or use facts available.

RIMA argues the related entities from

which it purchases charcoal are not

departments or subdivisions of RIMA

Industrial S/A, and that, therefore, the

charcoal it purchases from them is not

‘‘internally produced.’’ Moreover, it

argues that its use of the prices from

third-party suppliers was justified in

light of statutory provisions. Because

the prices from its related suppliers

were, it admits, not at arms-length, they

could not be used in the cost calculation

because 19 U.S.C. § 1677b(f)(2) says that

prices between related companies can

be considered in determining the cost of

materials in CV only when such prices

‘‘fairly reflect the amount usually

reflected in sales of merchandise under

consideration in the market under

consideration.’’ Furthermore, because

the Department could not use the prices

from its related companies, RIMA

argues that it was justified in using the

prices of third-party suppliers as a

surrogate for the prices from its related

entities, because the statute provides

that when ‘‘a transaction is disregarded

* * * and no other transactions are

available for consideration, the

determination of the amount shall be

based on the information available as to

what the amount would have been if the

transaction had occurred between

persons that were not related.’’ See 16

U.S.C. § 1677b(f)(2). Under this

provision of the statute, RIMA argues,

there is no basis for the petitioners’

suggestion that the Department require

RIMA to calculate the fabrication costs

of charcoal for its related suppliers.

Moreover, RIMA argues, the Department

has used this methodology in other

cases, such as in Ferrosilicon from

Brazil; Final Determination at 738.

With respect to petitioners’ argument

that RIMA purchased quartz from

related suppliers, RIMA argues that

petitioners’ argument is unfounded. It

states that there is no evidence in the

record that RIMA purchased quartz from

any related suppliers.

Department’s Position

At the Department’s request, RIMA

submitted information relating to the

COP of charcoal incurred by RIMA’s

affiliates during each month of the POR.

However, we noted that RIMA did not

report reforestation, depreciation,

depletion, and exhaustion costs.

Therefore, because we cannot rely on

RIMA’s reported costs for self-produced

charcoal, we have used the prices RIMA

paid for charcoal to unrelated suppliers

to value RIMA’s charcoal costs.

With respect to quartz, we agree with

respondent that there is no information

on the record indicating that RIMA

purchased quartz from affiliated

suppliers during this POR. Therefore,

we have has not adjusted RIMA’s

reported direct material costs for any

supposedly self-produced quartz.

Comment 30

Petitioners argue that the Department

erred in its calculation of RIMA’s COP

by using RIMA’s reported G&A

expenses. They argue that the

Department should reject RIMA’s

reported G&A expenses because RIMA

did not calculate them using the

Department’s standard methodology for

calculating G&A expenses, which is to

multiply the COM by the ratio between

the G&A expenses and the cost of sales

reported in the respondent’s audited

financial statements. Moreover,

petitioners allege that the method RIMA

used was flawed for two reasons. First,

it was based on monthly G&A expenses.

The Department expressly rejected use

of monthly G&A expenses in the 1991–

92 review in this proceeding. See

Silicon Metal from Brazil; First Review

Final Results. Second, RIMA’s

calculation used 1994 data to derive

monthly G&A expenses for 1995.

In addition, petitioners argue that in

its computation of G&A expenses used

in the CV calculation RIMA made one

additional mistake. That mistake was to

include an offset for ‘‘other operational

income’’ in the monthly G&A

calculations. Petitioners argue that this

‘‘other operational income’’ consisted of

an alleged inventory holding gain due to

hyperinflation. The Department should

deny this offset, petitioners argue,

because its practice is to allow an offset

to G&A only for income related to the

production of the subject merchandise.

The ‘‘other operational income’’ here,

petitioners argue, is an accounting

adjustment that does not constitute

income. Moreover, petitioners argue that

some of this income is unrelated to

silicon metal, but is instead related to

RIMA’s other products. Therefore,

petitioners conclude, the Department

should deny this adjustment.

RIMA argues that it reported its G&A

costs based on its accounting records

kept in the normal course of business.

Thus, RIMA argues, the Department

should use those reported costs

pursuant to 19 U.S.C. § 1677b(f)(1)(A),

which states that ‘‘costs shall be

calculated based on the records of the

exporter or producer of the

merchandise, if such records are kept in

accordance with the generally accepted

accounting principles of the exporting

country * * * and reasonably reflect

the costs associated with the production

and sale of the merchandise.’’

Furthermore, RIMA argues, RIMA

allocated its G&A costs to silicon metal

based on the ratio of the cost of goods

sold, which is the normal allocation

method the Department uses. See e.g.,

Ferrosilicon from Brazil; Final

Determination at 734.

Furthermore, RIMA argues that the

Department properly adjusted the G&A

costs used in CV to account for a onetime reevaluation of the company’s

inventory. In support of this argument,

RIMA points to the verification report,

which says, ‘‘due to hyperinflation in

Brazil in 1994, Rima reassessed the

value of the company’s inventory,

resulting in a 15,000,000,000 reais

increase in inventory value * * * Rima

provided the inventory re-evaluation

report indicating the methodology and

amount associated with the reevaluation, as well as an independent

auditor’s report approving the inventory

re-evaluation.’’ See October 3, 1996

verification report, at 15.

Department’s Position

We agree with petitioners that our

standard methodology in calculating

G&A expenses is to multiply the COM

by the ratio between the G&A expenses

and the cost of sales reported in the

respondent’s audited financial

statements. See Silicon Metal from

Brazil; First Review Final Results, at

42809. We have used this method in our

final results of this review.

Furthermore, the Department has

determined that the adjustment made by

RIMA to its inventory balance should

not be allowed as a reduction to the

company’s G&A expense. RIMA chose

to restate the historical value of its

inventory balances by recognizing a

one-time increase to reflect the current

value of these assets. The accounting

entries for this restatement included a

credit to the net equity of the company

that was recognized through RIMA’s

income statement. Here, the record does
1986 Federal Register / Vol. 62, No. 9 / Tuesday, January 14, 1997 / Notices

not indicate that this credit, or offset,

can be characterized as income that

reduces RIMA’s production cost for

silicon metal. Consequently, we have

made an adjustment to G&A expense to

exclude this offset.

Comment 31

Petitioners argue that the Department

erred in its computation of RIMA’s COP

by using the financial expenses as RIMA

reported them. Petitioners argue that

RIMA’s method of calculating its

financial expenses was flawed because

RIMA did not perform its computation

using the Department’s standard

formula. That formula is, according to

petitioners, to multiply COM by the

ratio between the financial expenses

and cost of sales reported in the

respondent’s audited financial

expenses. Instead, RIMA calculated

financial expenses for silicon metal for

the months of the POR during 1994

based on its company-wide financial

expenses in each month multiplied by

the percentage of its cost of sales in that

month accounted for by sales of silicon

metal. Additionally, RIMA derived

monthly financial expenses for the

months of the POR in 1995 using its

1994 data.

RIMA argues that the Department

should accept RIMA’s calculation of

financial expenses because it reported

these costs as they are recorded in its

accounting records in the normal course

of business. Thus, accepting them is in

accordance with 19 U.S.C.

§ 1677b(f)(1)(A), which states that:

[c]osts shall normally be calculated based on

the records of the exporter or producer of the

merchandise, if such records are kept in

accordance with the generally accepted

accounting principles of the exporting

country . . . and reasonably reflect the costs

associated with the production and sale of

the merchandise. The administering

authority shall consider all available

evidence on the proper allocation of costs,

including that which is made available by the

exporter or producer on a timely basis, if

such allocations have been historically used

by the exporter or producer.

Department’s Position

In order to ensure uniformity in our

treatment of different companies and

consistency in our calculation

methodology from one review to the

next, we have found it necessary to

adopt standard formulas for the

calculation of certain expenses. We

agree with petitioners that our method

of calculating financial expenses is to

multiply COM by the ratio between the

financial expenses and cost of sales

reported in the respondent’s audited

financial expenses. We have used this

methodology in these final results of

review for all companies. This

methodology is not inconsistent with

RIMA’s accounting records because it is

based on information contained in

RIMA’s financial statement.

Comment 32

Petitioners argue that the Department

erred in its calculation of RIMA’s and

Minasligas’ U.S. credit expenses by

using the shipment date that these

companies reported in their sales

listings. With respect to RIMA,

petitioners argue that using RIMA’s

reported shipment date results in an

understatement of U.S. credit expenses

because RIMA reported as the shipment

date the date on which it shipped the

last lot of each sale from its plant to the

Brazilian port, rather than the date on

which it shipped the first lot of each

sale from its plant to the Brazilian port.

Therefore, petitioners argue, the

Department should determine the credit

expenses for each sale based on the

simple average of the number of days

between the date of payment and the

date of shipment from the plant to the

port for each partial shipment from the

plant.

With respect to Minasligas,

petitioners argue that the shipment date

Minasligas reported was the bill of

lading date, and not the date of

shipment from Minasligas’ plant. In a

similar situation in the preliminary

results of the third review of this order,

the Department used the date of sale as

the date of shipment; petitioners argue

that the Department should do the same

here.

RIMA argues that the Department

properly used the reported shipment

dates because it ships its U.S. sales from

its plant to the Brazilian port in lots,

and a lot is not completed until all

shipments from the plant have been

made. Therefore, RIMA argues, it is

proper for the Department to consider

the date of the last shipment from the

plant as the date on which the lot was

shipped from the plant.

Department’s Position

We agree with petitioners in part.

With respect to RIMA, we agree that

where a U.S. sale is shipped from the

plant to the port in lots, a computation

of credit based on the average credit

period would better reflect the credit

expenses borne by the respondent than

would a computation based on the

shipment date of either the first or last

lot. In these final results of review we

have calculated credit using an average

credit period based on information

RIMA provided in exhibit 13 of its April

30, 1996 SQR.

We disagree with petitioners with

respect to Minasligas. While Minasligas

did report the bill of lading date as the

shipment date for its U.S. sales, it also

reported the invoice date for each sale.

This invoice date is the date of

shipment from the plant. See

Minasligas’ October 25, 1995

questionnaire response, exhibit C–1.

Thus, there is no need to use the date

of sale as the date of shipment as

petitioners suggest. In these final results

of review we have calculated credit

using the invoice date as the start of the

credit period for those sales for which

the date of invoice was prior to the date

of receipt of payment.

Comment 33

Eletrosilex argues that the Department

erred in failing to add to USP the PIS,

COFINS, and consumption taxes

charged on its home market comparison

sales. It argues, with respect to the PIS

and COFINS taxes, that this failure was

a violation of the Department’s policy of

calculating tax-neutral dumping

assessments. It argues, with respect to

the consumption taxes, that this failure

was a violation of the change in the

treatment of consumption taxes that the

Department announced in the final

results of the second review of this case.

There the Department stated:

Where merchandise exported to the United

States is exempt from the consumption tax,

the Department will add to the U.S. price the

absolute amount of such taxes charged on the

comparison sales in the home market.

See Silicon Metal from Brazil; Second

Review Final Results, at 46764.

Eletrosilex argues that because the ICMS

tax was not included in the USP

calculations, the Department’s failure to

add to USP the absolute amount of

consumption taxes charged on its home

market sales was a violation of the

Department’s announced policy of

adding to the USP ‘‘the absolute amount

of such taxes charged on the comparison

sales in the home market.’’

Petitioners argue that, with respect to

the PIS and COFINS taxes, that the

antidumping law, as amended by the

URAA, does not provide for an upward

adjustment to EP for home market taxes

imposed directly upon ‘‘the

merchandise or components thereof’’

which have not been rebated or

collected on the exported merchandise.

Instead, under the new law, NV may be

reduced by those taxes. Furthermore,

petitioners argue that for the reasons

given above under comment 26, the PIS

and COFINS taxes do not qualify for a

reduction to NV.

Petitioners argue, with respect to the

ICMS tax (i.e., consumption tax), that
Federal Register / Vol. 62, No. 9 / Tuesday, January 14, 1997 / Notices 1987

evidence on the record indicates that,

contrary to Eletrosilex’s statement,

Eletrosilex’s reported U.S. prices did in

fact include the ICMS tax due on its

U.S. sales. Furthermore, petitioners

argue, Eletrosilex’s argument is relevant

only when the Department bases its

margin calculations on price-to-price

comparisons, and after the Department

makes the necessary corrections in its

calculations for Eletrosilex that the

petitioners have identified in their case

brief, the Department will base its

margin calculations for Eletrosilex on

CV.

Department’s Position

We agree with petitioners that

evidence on the record indicates that

ICMS taxes are assessed on Eletrosilex’s

U.S. sales. In these final results of

review, in order to calculate the

dumping margin on a tax-neutral basis

for price-to-price comparisons, we have

deducted from NV the amount of ICMS

tax on the home market sale that

exceeds the amount of ICMS tax

collected on the U.S. sale in accordance

with § 773(a)(6)(B)(iii). For our position

with respect to the PIS and COFINS

taxes, see comment 26 (above). For our

treatment of the ICMS tax due on U.S.

sales when NV is based on CV, see the

Department’s position in response to

comment 7.

Comment 34

Eletrosilex argues that the Department

erred in its calculation of home market

imputed credit by dividing an allegedly

annual interest rate by 30, rather than by

365.

Petitioners argue that the interest rate

the Department used in its calculation

was a monthly rate, and that the

Department was therefore correct in

using 30 in the denominator.

Department’s Position

We agree with petitioners. For the

credit calculation we used the monthly

rates from the state bank of Minas

Gerais, which Minasligas reported in

exhibit B–2 of its October 25, 1995

questionnaire response. This exhibit

states that these rates are monthly rates.

Therefore, because these are monthly

rates, 30 is the appropriate denominator.

Comment 35

Eletrosilex argues the Department

erred in its calculation of the foreign

unit price in dollars (FUPDOL) by

converting three values into U.S. dollars

using the exchange rate of the date of

sale, rather than the date of shipment.

Petitioners argue that the Department

used the correct exchange rates because

the statute says that the Department

‘‘shall convert foreign currencies into

United States dollars using the exchange

rate in effect on the date of sale of the

subject merchandise * * *’’ See

773A(a) of the Act.

Department’s Position

We agree with petitioners. Because

the date we use in making currency

conversions is governed by the statute,

in these final results we have used the

exchange rate of the date of the U.S. sale

in making currency conversions.

Comment 36

Eletrosilex argues the Department

erred in its computation of COP by

doubling the amount of its reported

depreciation. (Eletrosilex reported

depreciation for only the six months of

the POR in 1995, and no depreciation

for the six months of the POR in 1994.)

It argues that its recording of no

depreciation for 1994 was fully

consistent with Brazil’s generally

accepted accounting principles (GAAP).

Its earlier application of accelerated

depreciation, Eletrosilex argues,

required it to interrupt the application

of depreciation for the first part of the

POR. It is an error, it argues, for the

Department to charge depreciation

beyond that legitimately accounted for

under the law.

Petitioners argue that the Department

was correct in including an amount for

1994 depreciation in Eletrosilex’s COP.

They argue that the auditor’s report

which accompanied Eletrosilex’s 1994

financial statement shows that

Eletrosilex is incorrect in stating that its

recording of no depreciation for 1994

was in accordance with Brazilian

GAAP. That auditor’s report says that

‘‘the company did not recognize * * *

amounts corresponding to the

depreciation of the fixed assets, as

required by the accounting principles

foreseen in the CORPORATE’S

LEGISLATION and by the main

accounting principles.’’ See Eletrosilex’s

October 20, 1995 questionnaire

response, at exhibit 8. Furthermore,

petitioners argue, under established

Department practice, it is distortive to

use a lower depreciation rate (including

a zero depreciation rate) in a review

period to compensate for prior

accelerated depreciation. See

Ferrosilicon from Brazil; Final

Determination at 738.

Department’s Position

We agree with petitioner that

evidence from Eletrosilex’s financial

statement indicates that Eletrosilex’s

accounting of depreciation was not in

accord with Brazilian GAAP. For these

final results of review, we have used the

depreciation expenses as estimated by

Eletrosilex’s independent auditor,

which were in accordance with

Brazilian GAAP. See Eletrosilex’s

October 16, 1996 submission at exhibit

7.

Comment 37

Eletrosilex argues that the Department

erred in its computation of its COP by

incorrectly calculating the by-product

revenue offset that it applied to

Eletrosilex’s COM. The firm argues that

the Department was in error in

calculating the offset based on the

volume of the by-products sold, rather

than the volume produced. Because

much of the by-product production is

not sold, it is only proper, Eletrosilex

argues, that an allocation in terms of

cost of production should be made to

the product produced, rather than that

portion of the product produced that is

sold. In addition, Eletrosilex argues the

Department should consider as byproducts only ladle sculls, off-grades,

and fines, and not slag or silicon metal

of ingot bottom. Eletrosilex states that it

does not consider slag or silicon metal

of ingot bottom to be a production item,

and does not include it in its production

volume records.

Petitioners argue that the

Department’s practice does not support

calculating an offset to COM based on

the volume of by-products produced,

but only on the volume sold.

Department’s Position

We do not agree with Eletrosilex that

the by-product offset should be applied

to the volume of by-products produced.

Our policy is to allow an offset only for

actual revenue. In these final results of

review we have offset production costs

with all revenue that Eletrosilex

reported from its sale of by-products.

We have counted as by-products only

ladle sculls, off-grades, and fines. See

also comment 15 of the third review

final results of review this order, being

issued concurrently.

Comment 38

Eletrosilex argues that the Department

should make an adjustment to its USP

for duty drawback. It explains that in its

questionnaire response it inadvertently

failed to request an adjustment for duty

drawback, but that it is entitled to one.

Therefore, Eletrosilex argues that the

Department should use the information

it submitted in its case brief to calculate

the adjustment. It argues that the duty

drawback adjustment is essential to the

Department’s responsibility to make

duty assessments based on full and

accurate data.
1988 Federal Register / Vol. 62, No. 9 / Tuesday, January 14, 1997 / Notices

Petitioners argue that Eletrosilex did

not inadvertently fail to request an

adjustment for duty drawback. In its

questionnaire response, Eletrosilex

specifically stated that ‘‘it is not seeking

a duty drawback for the period of

review.’’ See Eletrosilex’s October 20,

1995, questionnaire response, p. 55.

Moreover, petitioners argue that the

Department should not consider

Eletrosilex’s request or the information

about this newly-claimed adjustment

that Eletrosilex submitted in its case

brief because it is untimely under the

Department’s regulations. See 19 CFR

353.31(a)(1)(ii).

Department’s Position

We agree with petitioners. It is a

respondent’s responsibility to make a

timely claim for any requested

adjustment. Under 19 CFR 353.31(a)(3)

the Department may not consider

unsolicited information submitted after

the applicable time limit. That time

limit in this review is 180 days after the

date of publication of the initiation

notice. See 19 CFR 353.31(a)(1)(ii).

Because Eletrosilex submitted its duty

drawback claim after that deadline, the

information was untimely, and we did

not make an adjustment for it in these

final results of review.

Comment 39

CCM argues that in order for its cash

deposit rate for future entries to reflect

the appropriate dumping margin, the

Department should issue the third

review final results prior to, or

concurrently with, issuance of the

fourth review final results. If the

Department issues the fourth review

final results prior to the third review

final results, CCM argues, CCM will

continue to face the 93.2 percent cash

deposit rate established in the LTFV

investigation. In the alternative, if the

Department does issue the third review

final results after the fourth review,

CCM argues that the Department should

make clear in it cash deposit

instructions that CCM’s third review

cash deposit rate should apply to all

future entries because CCM was a noshipper in the fourth review.

Department’s Position

CCM’s concern is resolved because

the Department is issuing the results of

both reviews concurrently.

Comment 40

CBCC argues that the Department

erred in its computation of home market

imputed credit by using an interest rate

other than that which CBCC submitted.

CBCC states that in its submission it

calculated its imputed credit using a

published short-term borrowing rate

from a commercial lender because it had

no short-term borrowings during the

POR. Doing so, CBCC states, was in

accordance with the Department’s

instructions as given in the

supplemental questionnaire. Thus,

CBCC argues, the Department should

not have applied a different rate in its

calculation of imputed credit.

Petitioners argue that the Department

is under no obligation to use the interest

rate data that CBCC provided, and that

CBCC provided no basis for the

Department to use CBCC’s data instead

of those used for the preliminary results

of this review. Accordingly, petitioners

argue, the Department should not use

CBCC’s data for the final results.

Department’s Position

We agree with petitioners. In these

final results of review, as in the

preliminary results of review, we have

calculated credit using the borrowing

rates offered by the state bank of Minas

Gerais. These rates are publicly

available, and we have used them

without exception for all respondents

who reported no short-term borrowings

of their own during the POR.

Comment 41

CBCC argues that the Department

erred in its calculation of the variable

NPRICOP (i.e., the price we compare to

COP in the cost test) by doublededucting part of the ICMS tax. It argues

the Department made this mistake by

deducting a variable representing the

ICMS tax on the sale and also a variable,

INLFTC2H, that represents the inland

freight and the ICMS tax on the inland

freight. CBCC argues that the former

variable includes all ICMS tax on the

sale, including that included in the

variable INLFTC2H. Therefore, CBCC

argues, the Department should not

deduct INLFTC2H, but INLFTC1H, a

variable that represents the inland

freight net of the ICMS tax.

Petitioners argue that CBCC’s

argument is wrong because the ICMS tax

that CBCC’s customers pay on their

purchases of silicon metal is not the

same ICMS tax that CBCC paid for

inland freight services. Because the two

different ICMS tax amounts both reduce

CBCC’s net proceeds from home market

sales, petitioners argue that the

Department properly deducted both

from CBCC’s home market sales prices

in the sales-below-cost analysis.

Department’s Position

We agree with petitioners. Our review

of the values CBCC reported under the

variable representing the ICMS tax

indicates that it reflects only the ICMS

tax on the home market sale. Thus, the

ICMS tax due on the inland freight must

be deducted separately.

Comment 42

CBCC argues that the Department

erred in its calculation of its COP by

reducing its reported quantity of silicon

metal production by the quantity of a

by-product, ferrosilicon 95, without

having made a corresponding offset to

its COP for revenue gained from its sales

of ferrosilicon 95. CBCC argues that this

failure to grant an offset was a violation

of the Department’s practice regarding

by-products.

Petitioners argue that the Department

should limit any reduction in COP for

revenue obtained from CBCC’s sales of

ferrosilicon 95 to net revenue (i.e.,

revenue net of all selling expenses

associated with the sales) from sales

during the POR.

Department’s Position

The Department first learned of these

sales at the verification in June 1996.

None of our exhibits contain

information regarding the value of these

sales or the selling expenses associated

with them. Because CBCC did not claim

this offset until it submitted its case

brief, and because it is a respondent’s

responsibility to substantiate its claims

for offsets, which CBCC has not done, in

these final results of review we have not

made an offset.

Comment 43

CBCC argues the Department erred in

its margin computation by failing to

convert the variable for bank charges

from aggregate figures to per-unit

figures.

Petitioners argue that the Department

did in fact convert the bank charges into

per-unit figures in its calculations.

Department’s Position

We agree with petitioners. See the

July 22, 1996 verification report at 15,

and the SAS program at 824–847.

Comment 44

RIMA argues that the Department

erred by including in its margin

calculation a sale that entered U.S.

customs territory during the previous

POR. It argues that the date on which

the Department relied in making its

determination of this sale’s date of entry

was not the actual date of entry, and

that therefore the Department should

request additional information from the

U.S. Customs Service regarding the

entry date of this sale.

Petitioners argue that the correct date

of entry into U.S. customs territory is

the date the entry summary was filed in
Federal Register / Vol. 62, No. 9 / Tuesday, January 14, 1997 / Notices 1989

proper form. However, they argue that

the date on which the Department relied

regarding the particular sale which

RIMA references was not in fact the date

the entry summary was filed. They are

in agreement with RIMA, however, that

the sale at issue entered U.S. customs

territory during the prior POR.

Department’s Position

On October 21, 1996, the importer of

the shipment in question submitted

information on its imports. We have

carefully reviewed the importer’s

submitted Customs documentation, and

have determined that the Department

was in error in its preliminary

determination that the sale in question

involved an entry during the POR. We

have excluded this transaction from our

analysis for the fourth administrative

review, and have included it in our

analysis of the third administrative

review. However, we disagree with

petitioners that the date of entry is

necessarily the date on which the entry

summary is filed in proper form. 19 CFR

141.68 allows for the possibility that

formal entry may in some circumstances

be dates other than the date the entry

summary is filed.

Comment 45

Parties allege the following clerical

errors:

• CBCC and petitioner argue the

Department erred in its margin

computation by failing to convert the

variable for interest revenue from

aggregate figures to per-unit figures.

• CBCC argues that the Department

incorrectly calculated the credit period

as the shipment date minus the payment

date, rather than the payment date

minus the shipment date.

• Petitioners argue that the

Department erred by failing to deduct

‘‘port charges’’ from Eletrosilex’s USP.

• Petitioners argue that the

Department erred in its calculation of

Minasligas’ USP by adding inland

freight charges to USP, rather than

subtracting them.

• Petitioners argue that the

Department neglected to take into

account an expense that Minasligas

reported under the variable name

‘‘PORT CLER. EXP. DIRSELU.’’

Department’s Position

We agree, and have corrected these

errors in these final results of review.

Additionally, in these final results of

review, unlike the preliminary results of

review, we have made an adjustment to

NV for Eletrosilex’s U.S. post-sale

warehousing expenses. We also changed

the credit period used in the calculation

of Minasligas’ home market credit so

that it is the payment date minus the

shipment date, rather than the shipment

date minus the payment date.

Comment 46

CBCC argues that the Department

erred in its calculation of U.S. imputed

credit by dividing an annual interest

rate by 30, rather than by 365.

Department’s Position

We disagree. The interest rate we used

in the calculation of CBCC’s U.S.

imputed credit expenses was the

average of the monthly rates for each of

the twelve months of the POR, and not

an annual rate. Therefore, 30 is the

correct denominator. See September 4,

1996 CBCC preliminary results analysis

memorandum, p. 4.

Final Results of Review

As a result of our analysis of the

comments received, we determine that

the following margins exist for the

period July 1, 1994, through June 30,

1995:

Producer/manufacturer/exporter

Weightedaverage

margin

(percent)

CBCC ........................................ 0.29

CCM .......................................... 1 5.97

Eletrosilex ................................. 17.22

Minasligas ................................. 57.54

RIMA ......................................... 76.96

1 No shipments during the POR; margin

taken from the last completed segment in

which there were shipments.

The Department shall determine, and

the Customs Service shall assess,

antidumping duties on all appropriate

entries. Individual differences between

USP and NV may vary from the

percentages stated above. The

Department will issue appraisement

instructions directly to the Customs

Service.

Furthermore, the following deposit

requirements will be effective upon

publication of these final results of

review for all shipments of silicon metal

from Brazil entered, or withdrawn from

warehouse, for consumption on or after

the publication date, as provided by

section 751(a)(1) of the Act, and will

remain in effect until publication of the

final results of the next administrative

review: (1) the cash deposit rates for the

reviewed companies will be those rates

listed above except for CBCC which had

a de minimis margin, and whose cash

deposit rate is therefore zero; (2) for

previously reviewed or investigated

companies not listed above, the cash

deposit rate will continue to be the

company-specific rate published for the

most recent period; (3) if the exporter is

not a firm covered in this review, a prior

review, or the original LTFV

investigation, but the manufacturer is,

the cash deposit rate will be the rate

established for the most recent period

for the manufacturer of the

merchandise; and (4) if neither the

exporter nor the manufacturer is a firm

covered in this or any previous review

or in the LTFV investigation conducted

by the Department, the cash deposit rate

will be 91.06 percent, the ‘‘all others’’

rate established in the LTFV

investigation.

This notice serves as a final reminder

to importers of their responsibility

under 19 CFR 353.26 to file a certificate

regarding the reimbursement of

antidumping duties prior to liquidation

of the relevant entries during this

review period. Failure to comply with

this requirement could result in the

Secretary’s presumption that

reimbursement of antidumping duties

occurred and the subsequent assessment

of double antidumping duties.

This notice also serves as a reminder

to parties subject to administrative

protective order (APO) of their

responsibility concerning the

disposition of proprietary information

disclosed under APO in accordance

with 19 CFR 353.34(d). Timely written

notification of the return/destruction of

APO materials or conversion to judicial

protective order is hereby requested.

Failure to comply with the regulations

and the terms of an APO is a

sanctionable violation.

This administrative review and notice

are in accordance with section 751(a)(1)

of the Act (19 U.S.C. § 1675(a)(1)) and

19 CFR 353.22.

Dated: January 3, 1997.

Robert S. LaRussa

Acting Assistant Secretary for Import

Administration.

[FR Doc. 97–755 Filed 1–13–97; 8:45 am]

BILLING CODE 3510–DS–P