18486 Federal Register / Vol. 62, No. 72 / Tuesday, April 15, 1997 / Notices

affect the calculation of margins in

administrative reviews. This new

provision of the law is not intended to

provide for the treatment of

antidumping duties as a cost.’’); see also

H. Rep. No. 103–826(I), 103rd Cong.,

2nd Sess. (1994) at 60.

Final Results of Review

As a result of our review, we

determine that the following weightedaverage margin exists:

Manufacturer/

exporter Period of review

Margin

(percent)

Hoogovens

Staal B.V. .... 8/1/94–7/31/95 4.33

The Department shall determine, and

the Customs service shall assess,

antidumping duties on all appropriate

entries. Individual differences between

United States price and foreign market

value 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 this notice of final results

of review for all shipments of coldrolled carbon steel flat products from

the Netherlands entered, or withdrawn

from warehouse, for consumption on or

after the publication date, as provided

for by section 751(a)(1) of the Act: (1)

The cash deposit rate for the reviewed

company will be the rate for that firm

as stated above; (2) if the exporter is not

a firm covered in this review, or the

original less than fair value (LTFV)

investigation, but the manufacturer is,

the cash deposit rate will be the rate

established for the most recent period

for the manufacturer of the

merchandise; and (3) if neither the

exporter nor the manufacturer is a firm

covered in this review, the cash deposit

rate will be 19.32 percent. This is the

‘‘all others’’ rate from the amended final

determination in the LTFV

investigation. See Amended Final

Determination Pursuant to CIT

Decision: Certain Cold-Rolled Carbon

Steel Flat Products from the

Netherlands, 61 FR 47871. These

deposit requirements, when imposed,

shall remain in effect until publication

of the final results of the next

administrative review.

This notice serves as a final reminder

to importers of their responsibility

under § 353.26 of the Department’s

regulations 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 § 353.34(d) of the Department’s

regulations. Timely notification of

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 this

notice are in accordance with section

751(a)(1) of the Act (19 U.S.C.

1675(a)(1)) and § 353.22 of the

Department’s regulations.

Dated: April 2, 1997.

Robert S. LaRussa,

Acting Assistant Secretary for Import

Administration.

[FR Doc. 97–9427 Filed 4–14–97; 8:45 am]

BILLING CODE 3510–DS–P

DEPARTMENT OF COMMERCE

International Trade Administration

[A–351–817]

Certain Cut-to-Length Carbon Steel

Plate From Brazil: Final Results of

Antidumping Duty Administrative

Review

AGENCY: Import Administration,

International Trade Administration,

Department of Commerce.

ACTION: Notice of final results of

antidumping duty administrative

review.

SUMMARY: On October 4, 1996, the

Department of Commerce (the

Department) published the preliminary

results of the administrative review of

the antidumping duty order on certain

cut-to-length carbon steel plate from

Brazil. This review covers one

manufacturer/exporter of the subject

merchandise to the United States during

the period of review (POR), August 1,

1994, through July 31, 1995. We gave

interested parties an opportunity to

comment on our preliminary results.

Based on our analysis of the comments

received, we have changed the results

from those presented in the preliminary

results of review.

EFFECTIVE DATE: April 15, 1997.

FOR FURTHER INFORMATION CONTACT:

Helen Kramer or Linda Ludwig,

Enforcement Group III, Import

Administration, International Trade

Administration, U.S. Department of

Commerce, 14th Street and Constitution

Avenue, NW, Washington, D.C. 20230;

telephone: (202) 482–0405 or (202) 482–

3833, respectively.

SUPPLEMENTARY INFORMATION:

Background

On October 4, 1996, the Department

published in the Federal Register (61

FR 51904) the preliminary results of the

administrative review of the

antidumping duty order on certain cutto-length carbon steel plate from Brazil

(58 FR 44164, August 19, 1993). The

Department has now completed this

administrative review in accordance

with section 751 of the Tariff Act of

1930, as amended (the Act).

Applicable Statute and Regulations

Unless otherwise stated, all citations

to the Tariff Act of 1930, as amended

(the Tariff Act) are references to the

provisions effective January 1, 1995, the

effective date of the amendments made

to the Tariff Act by the Uruguay Round

Agreements Act (URAA). In addition,

unless otherwise indicated, all citations

to the Department’s regulations are to

the current regulations, as amended by

the interim regulations published in the

Federal Register on May 11, 1995 (60

FR 25130).

Scope of This Review

The products covered by this

administrative review constitute one

‘‘class or kind’’ of merchandise: certain

cut-to-length carbon steel plate. These

products include hot-rolled carbon steel

universal mill plates (i.e., flat-rolled

products rolled on four faces or in a

closed box pass, of a width exceeding

150 millimeters but not exceeding 1,250

millimeters and of a thickness of not

less than 4 millimeters, not in coils and

without patterns in relief), of

rectangular shape, neither clad, plated

nor coated with metal, whether or not

painted, varnished, or coated with

plastics or other nonmetallic substances;

and certain hot-rolled carbon steel flatrolled products in straight lengths, of

rectangular shape, hot rolled, neither

clad, plated, nor coated with metal,

whether or not painted, varnished, or

coated with plastics or other

nonmetallic substances, 4.75

millimeters or more in thickness and of

a width which exceeds 150 millimeters

and measures at least twice the

thickness, as currently classifiable in the

Harmonized Tariff Schedule (HTS)

under item numbers 7208.40.3030,

7208.40.3060, 7208.51.0030,

7208.51.0045, 7208.51.0060,
Federal Register / Vol. 62, No. 72 / Tuesday, April 15, 1997 / Notices 18487

7208.52.0000, 7208.53.0000,

7208.90.0000, 7210.70.3000,

7210.90.9000, 7211.13.0000,

7211.14.0030, 7211.14.0045,

7211.90.0000, 7212.40.1000,

7212.40.5000, and 7212.50.0000.

Included are flat-rolled products of

nonrectangular cross-section where

such cross-section is achieved

subsequent to the rolling process (i.e.,

products which have been ‘‘worked

after rolling’’)—for example, products

which have been beveled or rounded at

the edges. Excluded is grade X–70 plate.

These HTS item numbers are provided

for convenience and Customs purposes.

The written description remains

dispositive.

On April 2, 1997, the Department

determined that ‘‘profile slab’’ produced

by Companhia Sideru ́rgica de Tubara ̃o

(CST) constitutes a type of plate and

therefore falls within the scope of the

antidumping order on carbon steel plate

from Brazil. Memorandum to Holly A.

Kuga, Regarding the Final Scope

Ruling—Antidumping and

Countervailing Duty Orders on Certain

Cut-to-Length Carbon Steel Plate from

Brazil—Request by Wirth Limited for a

Ruling on Profile Slab.

The POR is August 1, 1994, through

July 31, 1995. This review covers entries

of certain cut-to-length carbon steel

plate by Companhia Sideru ́rgica de

Tubara ̃o (CST).

Analysis of Comments Received

We gave interested parties an

opportunity to comment on the

preliminary results. We received case

and rebuttal briefs from the respondent

(CST) and petitioners (Bethlehem Steel

Corporation, U.S. Steel Company (a Unit

of USX Corporation), Inland Steel

Industries, Inc., Geneva Steel, Gulf

States Steel Inc. of Alabama, Sharon

Steel Corporation, and Lukens Steel

Company).

Comment 1

Respondent argues that the

Department incorrectly excluded home

market credit costs from its margin

calculations. In respondent’s view, the

taxa referential (TR), is the Brazilian

equivalent to a benchmark interest rate,

such as the prime rate or the LIBOR rate,

and the Department erred in rejecting

the TR as a useful surrogate for shortterm interest rates in Brazil.

Respondent notes that CST did not

have any short-term Brazilian currency

borrowing during the POR and in its

original Section B response it proposed

using CST’s borrowing rate in

connection with coal purchases as a

surrogate for short-term interest rates.

Respondent adds that the Department

rejected this approach and asked CST to

provide published home market prime

rates, such as the rates for the Bank of

Brazil or the Bank of Minas Gerais, and

use these rates for the calculation of

credit costs.

Respondent states that in its

supplemental response it provided TR

rates during the POR and provided

background materials on the TR which

state that the TR is a referential interest

rate and not an inflation index.

Respondent notes that the Department

did not raise any questions about the

use of the TR or any discrepancies

associated with the TR during

verification, in the verification report or

elsewhere during the proceeding, prior

to the September 25, 1996, decision

memorandum. Respondent argues that

the Department’s conclusion in this

memorandum that the TR is an inflation

index, not an interest rate, was not

supported and the Department did not

explain its departure from past findings.

CST objects on procedural grounds to

the Department’s decision not to make

a home market credit adjustment as the

Department did not inform respondents

of questions it had regarding submitted

information. See Bowe-Passat v. United

States, 17 CIT 335, 343 (1993).

CST alleges that the TR is an

appropriate rate to measure the cost of

credit because it is a rate calculated and

published by the Bank of Brazil similar

to the prime rate. Respondent also notes

that the Department, after extensive

verification, used the TR as the

surrogate home market interest rate in

Ferrosilicon from Brazil, 59 FR 732, 735

(Jan. 6, 1994). Respondent attached an

excerpt from a Brazilian treatise on

financial markets which states that the

TR was created to serve as a basic

referential rate of interest to be charged

in the month of issuance and ‘‘should

function as the LIBOR or prime rate.’’

Petitioners support the Department’s

denial of CST’s claimed deduction for

home market credit expenses without

elaboration.

Department’s Position

We agree in part with respondent and

have allowed a credit adjustment in the

final results. We note that the original

materials about the TR provided by

respondent (see CST’s February 29,

1996, submission) were unclear as to

whether the TR is a pure short-term

interest rate. These documents, taken

from the provisional bill establishing

the TR and the ‘‘Collor Plan’’ Manual

prepared by the Economy Ministry,

describe the TR as calculated by the

Central Bank of Brazil from ‘‘the average

of monthly net revenue by deposits with

fixed terms raised by branches of

commercial banks, investment banks or

multiple banks with commercial or

investment divisions, and/or federal

public bonds. * * *’’ (CST’s

translation.) This takes into account all

deposits with fixed terms, including

those in investment banks, and federal

public bonds, not just short-term

deposits. However, the information

submitted by respondent as an

attachment to its November 4, 1996,

case brief states that the TR was initially

calculated based on the weighted

average of the rates on 30–35 day bank

deposit certificates issued by a subgroup

of 20 financial institutions, and since

May 1, 1993, was calculated on a daily

basis.

The TR is further described in the

original materials we received as ‘‘a type

of interest rate which is based on the

market rate, including the expectation of

economic agents with regard to the

future revenue of financial assets.’’ The

phrase ‘‘a type of interest rate which is

based on the market rate,’’ suggests that

there is some kind of adjustment from

an actual interest rate. Respondent’s

more recent submission states that a

part of the actual interest rate is

deducted in calculating the TR so as to

discount the cost of taxes on the bank

deposit certificates.

Finally, we note that beyond issuing

a supplemental questionnaire, the

Department is not required to give prior

notice before disallowing a claimed

adjustment. Our supplemental

questionnaire clearly requested CST to

use published Brazilian prime rates in

its calculation of home market credit

expenses. CST substituted the TR

without explanation. There is no

indication that the respondent in

Ferrosilicon was asked to use a bank rate

for its home market credit calculation.

The Department is not obligated to make

additional requests for information

showing that the data respondent

submits meet the requirements imposed

by the Department. However, because

we have determined that the TR does,

in fact, appear to be a benchmark

comparable to a prime rate and is

published by the Bank of Brazil, we

have used the submitted TR data in

calculating CST’s credit adjustment.

Comment 2

Respondent argues that the

Department should calculate CST’s

home market imputed credit costs using

gross price. CST claims that its liability

for taxes is not contingent on customer

payment. CST submitted credit costs

based on net price and gross price.

Respondent states that in previous

decisions the Department has calculated

credit costs based on a gross price
18488 Federal Register / Vol. 62, No. 72 / Tuesday, April 15, 1997 / Notices

inclusive of taxes. (See Stainless Steel

Angles from Japan, 60 FR 16608, 16615

(March 31, 1995).)

Petitioners counter that if the

Department were to include a deduction

for home market credit expenses, it

should base this deduction on net price.

Petitioners argue that imputed credit

costs should reflect the cost to CST of

the time value of money and that in this

case, there is no opportunity cost to CST

of carrying the tax amounts as

receivables, since they will not be paid

to the Brazilian government until after

the receipt of payment from the

customer (Furfuryl Alcohol from South

Africa, 61 FR 22550, 22552 (May 8,

1995)).

Department’s Position

We agree with petitioners that credit

expenses should be calculated on the

basis of net price. See Final

Determination of Sales at Less than Fair

Value; Steel Wire Rope from Korea, 58

FR 11029, 11032 (February 23, 1993),

where the Department stated:

It is not the Department’s current practice

to impute credit expenses related to VAT

payments. We find that there is no statutory

or regulatory requirement for making the

proposed adjustment. While there may be a

potential opportunity cost associated with

the respondents’ prepayment of the VAT, this

fact alone is not a sufficient basis for the

Department to make an adjustment in priceto-price comparisons. We note that virtually

every charge or expense associated with

price-to-price comparisons is either prepaid

or paid for at some point after the cost is

incurred. Accordingly, for each pre- or postservice payment, there may also be an

opportunity cost or gain. Thus, to allow the

type of credit adjustment suggested by the

respondents would imply that in the future

the Department would be faced with the

virtually impossible task of trying to

determine the potential opportunity cost or

gain of every charge and expense reported in

the respondents’ home market and U.S.

databases. This exercise would make our

calculations inordinately complicated,

placing an unreasonable and onerous burden

on both respondents and the Department,

without necessarily ensuring a more accurate

dumping margin calculation.

The comment in the Stainless Steel

Angles case cited by the respondent

refers to pre-shipment advance payment

for the merchandise, rather than taxes,

and is not contrary to the Department’s

position with respect to basing credit

calculations on a price net of taxes.

Comment 3

Respondent observes that the

Department failed to make an upward

adjustment to U.S. price for CST’s duty

drawback adjustment, which the

Department must do under U.S. law.

CST notes that it calculated and

submitted and the Department verified

a per-ton duty drawback adjustment.

Respondent states that the Department

should correct this error in its final

determination.

Department’s Position

We agree with respondent and have

made the suggested correction in the

final results.

Comment 4

Respondent argues that the

Department should correct its home

market tax deduction. Respondent

claims that to achieve tax neutrality, the

Department should deduct from normal

value the full amount of the IPI tax

assessed on CST’s home market sales

but not on export sales. Instead, the

Department deducted only five percent

of the IPI tax assessed, because CST is

eligible for an incentive rebate of 95

percent of the IPI paid to the

government. CST claims that this is not

in accordance with antidumping law

and that the Department has no

authority in an AD proceeding to net

any subsequent receipts under a fiscal

incentive program against taxes

imposed. Citing Huffy Corp. v. United

States, 632 F. Supp. 50, 55 (CIT 1986),

respondent argues that if the

Department were to limit its adjustment

in this case to reflect the provision of a

subsequent incentive to CST, it would

in effect be increasing the amount of AD

duties by the amount of a possible

(though not proven) subsidy, without

ever determining whether such a

subsidy were even countervailable.

Respondent claims that in previous AD

investigations involving companies

entitled to the IPI fiscal incentive rebate,

the Department has never reduced the

IPI tax adjustment.

Petitioners argue that the Department

correctly calculated the IPI deduction.

Petitioners state the Department’s

methodology was consistent with the

URAA and cite the URAA’s Statement

of Administrative Action (SAA):

The deduction from normal value for

indirect taxes constitutes a change from the

existing statute. The change is intended to

ensure that dumping margins will be taxneutral. The requirement that the home

market consumption taxes in question be

‘‘added to or included in the price’’ of the

foreign like product is intended to insure that

such taxes actually have been charged and

paid on the home market sales used to

calculate normal value. * * * It would be

inappropriate to reduce a foreign price by the

amount of the tax, unless a tax liability had

actually been incurred on the sale.

Petitioners argue that because the

Department found that, although the IPI

amounts were paid to the government,

all but 95 percent of these amounts were

immediately credited back to CST in the

form of fiscal incentives, the

Department correctly declined to deduct

the full amount of the reported

adjustment.

Petitioners reject CST’s argument that

the Department should make an

adjustment on the full amount of the IPI

because the full amount is the amount

that was ‘‘paid.’’ Petitioners note that in

every instance part of the IPI is

immediately credited back to CST in a

percentage that is known beforehand,

limiting CST’s real tax liability to the

small portion that is paid but not

credited back. Thus, they state that the

Department correctly calculated CST’s

home market tax deduction and that

were the Department to do otherwise it

would violate the SAA’s requirement

that dumping margins ‘‘be tax neutral.’’

Petitioners also reject respondent’s

argument that the Department should

not be investigating fiscal incentive

credits in the context of an AD review

because the credits may also be

countervailable subsidies. Petitioners

claim that Huffy fully supports the

Department’s course of action. In that

case, according to petitioners, the CIT

stated that the Department must refrain

from making a subsidy determination in

the context of a dumping investigation,

and that in a dumping investigation the

Department is not seeking the same

information or asking the same

questions as it would in a

countervailing duty investigation.

Petitioners conclude that whether it is

possible that the IPI fiscal incentives

may also be countervailable subsidies

should not be considered in this

proceeding.

Department’s Position

Because the reported home market

sales are IPI-inclusive, we agree with the

respondent that, given the particular

circumstances of this case, the entire

amount of IPI tax paid should be

deducted from normal value, rather than

the amount paid minus the amount

rebated. Although respondent refers to

the IPI rebate only as a ‘‘possible

(though not proven) subsidy,’’ the

Department has already made a

determination that the IPI rebate at

issue, which is provided only to steel

companies, is a countervailable subsidy.

See Final Affirmative Countervailing

Duty Determinations: Certain Steel

Products from Brazil, 58 FR 37295,

37298–99, 37301 (July 9, 1993). Benefits

received on respondent’s sales of carbon

steel plate pursuant to the IPI rebate

program at issue are currently being

countervailed based on the

countervailing duty order issued in that
Federal Register / Vol. 62, No. 72 / Tuesday, April 15, 1997 / Notices 18489

companion case. Countervailing Duty

Order and Amendment to Final

Affirmative Countervailing Duty

Determination: Certain Steel Products

from Brazil, 58 FR 43751, 43751–52

(August 17, 1993). Section

773(a)(6)(B)(iii) of the Act, (19 U.S.C.

1677b (a)(6)(B)(iii)) provides for

reducing normal value by ‘‘the 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.’’ This provision embodies the

principle of GATT Article VI(5) that the

simultaneous implementation of

companion AD and CVD orders may not

result in a double remedy. If the rebate

were offset, it would reduce the amount

of the IPI tax deduction from normal

value by the amount of the rebate, thus

increasing the margin and thereby

correcting a second time for the rebate,

which has already been countervailed

under the companion CVD order.

Huffy Corp. v. United States, 632 F.

Supp. 50, 55 (CIT 1986), upon which

both parties rely, does not govern the

situation in this case. In Huffy, the CIT

rejected a claim by petitioner that a

subsidy should not be allowed to lower

an AD margin and that therefore ITA

improperly increased United States

Price for a rebate of import duties on

inputs. In reaching this decision, the

Huffy court pointed to a specific

statutory provision calling for the

adjustment for the import duty rebate at

issue and added that the Court should

not preempt the countervailing duty

statute and make determinations as to

whether a subsidy exists in the context

of an antidumping case. There was no

companion CVD order in the

administrative proceeding underlying

the decision in Huffy. In this case, the

determination that the IPI rebate

constitutes a subsidy has already been

made in the CVD case. The only

question is therefore how to obtain a

tax-neutral dumping margin and no

double remedy for subsidies and

dumping; this is achieved by

countervailing the IPI rebate under the

CVD order and deducting the full

amount of IPI paid from normal value

pursuant to section 773(a)(6)(B)(iii).

Comment 5

Respondent alleges that the

Department incorrectly determined that

CST’s date of sale in the home market

should be the order confirmation date.

CST states that many sales had multiple

order acknowledgments and that the

prices and terms set forth in any given

order acknowledgment could be and

were changed at will. Respondent

claims that the Department does not

recognize an event in the sales process

as a reliable date of sale if there is a

chance that the terms and conditions of

sale can and will change after that

event. Respondent cites Certain Cut-tolength Carbon Steel Plate from Brazil,

58 FR 37091, 37093 (July 9, 1993)

(Final), arguing that in this case the

Department rejected one respondent’s

U.S. date of sale methodology because it

found evidence of changes in the

material sales terms after the reported

date of sale in a small quantity of sales.

Respondent also cites to Canned

Pineapple Fruit from Thailand, 60 FR

29553 (June 5, 1995) (Final) in which

respondent claims the Department

asked respondents to indicate whether

changes could occur after the order date.

Respondent acknowledges that CST

does issue a new order acknowledgment

when terms are changed, but argues that

new order acknowledgments can be

issued until the date of shipment and

that changes can and do occur after an

order acknowledgment is issued.

Respondent also notes that the price in

local currency is not known until the

date of invoice and cites the

Department’s new draft regulations in

support of using date of invoice.

Petitioners argue that the Department

correctly determined the home market

date of sale to be the order

acknowledgment date. Petitioners

respond to CST’s argument that a sale

may have multiple order

acknowledgment dates, and that the

terms are not definitively set until

shipment, by noting that if terms were

changed a new order acknowledgment

would be issued. Petitioners add that

the mere fact that changes might occur

is irrelevant, since CST admits that if

there are changes a new order

acknowledgment is issued.

Petitioners distinguish this case from

the cases cited by respondent. With

respect to Certain Cut-to-length Carbon

Steel Plate from Brazil, 58 FR 37091,

37093 (July 9, 1993) (Final), petitioners

note that USIMINAS’s reported date of

sale was rejected because the

Department found evidence that there

were changes in the terms of sale after

the respondent’s date of sale. Petitioners

argue that even if CST’s claim that the

Department selected the invoice date as

the date of sale in Pineapples is correct,

that case is distinguishable from this

proceeding, because in this case there is

no possibility that there were changes in

material terms after respondent’s

reported date of sale.

Petitioners also reject CST’s argument

that the order acknowledgment date

cannot be the date of sale because the

price in local currency is not known

until the date of invoice. Petitioners

state that the law is clear—‘‘the essential

terms of price and quantity are firm

when they are no longer within the

control of the parties to alter.’’ (See

Polyvinyl Alcohol from Taiwan, 61 FR at

14067.) Petitioners, citing the

Department’s analysis memorandum

and verification report, add that by

CST’s own admission, at the time of

order acknowledgment the parties agree

on both the price in dollars and on the

exchange rate to be used on the date of

invoice. Thus, in petitioners’’ view,

price and quantity are set on the date of

order acknowledgment, as the final

invoice price is outside the control of

either party and is effectively fixed for

purposes of determining the date of sale.

Department’s Position

We agree with petitioners. CST stated

at verification that if there are changes

to an order acknowledgment, a new

order acknowledgment always is issued.

This is fully consistent with our

findings at verification; we found no

instances in which any terms were

changed after the final order

acknowledgment was issued. Thus,

while respondent may not know in

advance if an individual order

acknowledgment will be the final one,

in retrospect it can always do so. As

petitioners note, this fact distinguishes

the facts of this case from the cases cited

by respondent.

We also reject CST’s argument that

the order acknowledgment date cannot

be the date of sale because the price in

local currency is not known until the

date of invoice. We found at verification

that CST and its customer agree on both

the price in dollars and on the exchange

rate to be used on the date of invoice at

the time the order acknowledgment is

issued. Thus, price and quantity are set

on the date of order acknowledgment, as

the final invoice price is outside the

control of either party and is effectively

fixed for purposes of determining the

date of sale. It is immaterial if the exact

price in local currency is not known at

this time as long as the mechanism for

determining this price is set—which it

is in this case.

Comment 6

Respondent argues that the

Department incorrectly determined that

CST is affiliated with USIMINAS and

COSIPA. Respondent notes that the

Bozano Group only owned 20.3 percent

of the stock of CST and 8 percent of the

stock of USIMINAS. Respondent notes

that with respect to CST there were two

other shareholders with a percentage
18490 Federal Register / Vol. 62, No. 72 / Tuesday, April 15, 1997 / Notices

ownership of CST that was equal to

Bozano’s and there were two other

shareholders which each owned almost

13 percent of CST’s stock.

Respondent claims that there is no

evidence to support petitioners’’ claim

that Bozano was part of a controlling

shareholder group consisting of Bozano

and CVRD. Respondent cites to the

Shareholders’’ Agreement in

Verification exhibit 4A, which speaks of

a core group, consisting of the Bozano

Group, CVRD plus UNIBANCO and

Kawasaki. Citing the Shareholders’’

Agreement, respondent argues that no

single member of the group would be in

a position to exercise control, as actions

must have the support of parties holding

at least 60 percent of the shares.

Respondent further notes that Bozano

and CVRD, even together, only appoint

four of the nine members of CST’s Board

of Directors, known in Brazil as the

Administrative Council.

Respondent claims that Julio Bozano’s

position as president of CST’s

Administrative Council did not permit

him to exercise restraint or control over

CST. Again citing to the Shareholders’’

Agreement, respondent argues that the

purview of the Administrative Council

is limited to large corporate and

financial decisions, rather than setting

product pricing or production decisions.

Respondent claims that the

Department determined that CST was

affiliated with COSIPA solely because of

USIMINAS’ stockholdings in COSIPA.

Respondent does not discuss whether

USIMINAS and COSIPA are affiliated

because of its contention that CST is not

affiliated with USIMINAS. Respondent

argues if it is not affiliated with

USIMINAS, it is also not affiliated with

COSIPA.

Petitioners counter that the

Department’s determination that CST is

affiliated with USIMINAS AND COSIPA

is correct and fully supported by the

record. Petitioners note that the

Department’s decision was based on the

following: Julio Bozano is both

President and Chairman of CST’s Board

and President of USIMINAS’s Board;

Banco Bozano provided substantial

financing to all three steel producers;

the Bozano Group has a significant

minority shareholding interest in all

three steel producers; the combination

of Julio Bozano’s role as President of

USIMINAS, USIMINAS’ ownership of

almost half of COSIPA’s voting stock,

and the Bozano Group’s minority

ownership of COSIPA place Bozano in

a position of influence over COSIPA.

Petitioners state that CST does not

challenge the Department’s conclusion

regarding Bozano’s control over

USIMINAS and COSIPA.

Petitioners argue that the legislative

history of the URAA makes it clear that

the statute does not require majority

ownership for a finding of control, and

cites to prior Department control

decisions in which a party did not have

the power to appoint a majority of the

board (Certain Cold-Rolled Carbon Steel

Flat Products from Korea, 60 FR 65284

(Dec. 19, 1995). Petitioners claim that in

addition to its substantial ownership

stake in CST and its ability to name two

board members, Banco Bozano was the

largest private lender to CST throughout

the POR. Thus, in petitioners’ view,

CST’s argument that Bozano did not

control CST ignores ‘‘business and

economic reality,’’ the standard in the

SAA.

Petitioners also disagree with

respondent’s claims regarding the

Administrative Council. They note that

CST acknowledges that its

Administrative Council’s jurisdiction

includes power over: consolidations,

mergers and splitting operations

involving CST, and approval of, and

changes in CST’s long-term business

plans. Petitioners argue that these are

precisely the types of power that a

producer’s management exercises in

restructuring manufacturing priorities,

such as would be involved in shifting

production between CST and

USIMINAS. Petitioners further argue

that the Administrative Council’s

powers are more extensive than CST

concedes. Citing CST’s Bylaws,

petitioners claim that additional powers

of the Council include: monitoring the

performance of the directors; examining

the Company’s books; requesting

information on contracts; setting the

general orientation for Company

business; establishing the basic

guidelines for executive actions, as well

as issues relating to technical aspects of

production and marketing; and

authorizing the opening, transfer or

closing of offices, affiliates, subsidiaries,

or other Company establishments.

Petitioners also explain that on a day-today basis the Administrative Council

exercises control over CST through an

executive management group called the

executive directorate, selected by and

responsible to the Administrative

Council. Thus, petitioners conclude that

the Council does have legal power to

exercise restraint and direction over

CST’s operations.

Department’s Position

We agree with petitioners that CST is

affiliated with USIMINAS and COSIPA.

Section 771(33) of the Act, which

governs which entities shall be

considered ‘‘affiliated,’’ requires the

Department to base its findings of

control on several factors, not merely

the level of stock ownership. In

commenting on this section, the SAA

states that: ‘‘The traditional focus on

control through stock ownership fails to

address adequately modern business

arrangements, which often find one firm

‘operationally in a position to exercise

restraint or direction’ over another even

in the absence of an equity

relationship.’’ SAA at 838, quoting

section 771(33). Our decision regarding

affiliation was based on the following:

Julio Bozano is both President and

Chairman of CST’s Board and President

of USIMINAS’s Board; Banco Bozano

provided substantial financing to all

three steel producers; the Bozano Group

has a significant minority shareholding

interest in all three steel producers; the

combination of Julio Bozano’s role as

President of USIMINAS, USIMINAS’

ownership of almost half of COSIPA’s

voting stock, and the Bozano Group’s

minority ownership of COSIPA place

Bozano in a position of influence over

COSIPA.

Respondent’s argument against

affiliation focuses on: Bozano’s minority

shareholder role; under the terms of the

Shareholders’ Agreement support of 60

percent of the shareholdings is required;

Bozano does not appoint a majority of

the members of the board; and that Julio

Bozano’s position as President of CST’s

Administrative Council did not permit

Bozano to exercise restraint or control

over CST.

As petitioners state, the legislative

history of the URAA makes it clear that

the statute does not require majority

ownership for a finding of control. Even

a minority shareholder interest,

examined within the context of the

totality of other evidence of control, can

be a factor that we consider in

determining whether one party is

operationally in a position to control

another. In this case, the Bozano Group

has a minority shareholder interest in

all three steel companies in question,

and this can appropriately be

considered in our affiliation analysis. As

respondent’s only argument with

respect to Bozano’s control over

USIMINAS and COSIPA was that

Bozano’s minority shareholding was not

a sufficient basis for control, and

respondent did not address the other

factors considered by the Department,

we continue to support our original

decision with respect to these

companies.

With respect to CST’s Shareholders’

Agreement, we note that despite

multiple submissions from parties on

the issue of affiliation and petitioners’

specific allegations regarding the

existence of a ‘‘control group,’’ the first
Federal Register / Vol. 62, No. 72 / Tuesday, April 15, 1997 / Notices 18491

time respondent even identified the

existence of this agreement was at

verification. It is true that this

agreement is currently between the four

parties identified by respondent.

However, the Shareholders’ Agreement

indicates that it was originally an

agreement between CVRD and Bozano

(as of December 1, 1993). UNIBANCO

became a party to the agreement on

April 25, 1994. Kawasaki did not enter

the agreement until May 25, 1995—

close to the end of the POR.

Respondent acknowledges that its

Administrative Council’s jurisdiction

includes power over: consolidations,

mergers and splitting operations

involving CST, and approval of, and

changes in CST’s long-term business

plans. However, respondent has taken

this list of functions from the

Shareholders’ Agreement, not CST’s

Bylaws. As petitioners correctly state,

CST’s Administrative Council has

substantial additional functions under

the terms of CST’s Bylaws. Taken

together, these are precisely the types of

power that a producer’s management

exercises in restructuring manufacturing

priorities, such as would be involved in

shifting production between CST,

USIMINAS and COSIPA. While it is true

that the support of 60 percent of the

shareholdings is required to make

decisions under the terms of the

Shareholders’ Agreement, Julio

Bozano’s position as president of CST’s

Administrative Council allows him to

chair Council meetings, help set the

agenda for meetings, vote and voice his

opinion on proposals before the

Council. This clearly gives him the

potential to influence pricing and

production decisions with respect to

CST. See Certain Cold-Rolled Carbon

Steel Flat Products from Korea, 60 FR

65284, 65284–5 (December 19, 1995),

Thus, for the reasons originally

enumerated in the Department’s

September 10, 1996, memorandum, we

continue to find that CST is affiliated

with USIMINAS and COSIPA.

Comment 7

Petitioners argue that the Department

must apply partial facts available

because CST withheld crucial

information regarding its affiliates.

Specifically, petitioners state that the

Department was not able to obtain

sufficient information to confirm that

CST was affiliated with a certain

Brazilian steel reseller until verification.

Petitioners state that this failure was

crucial, because CST’s sales to this

affiliated party matched a majority of its

U.S. sales, but failed the arm’s length

test and therefore could not be used by

the Department in price-to-price

comparisons. Furthermore, downstream

sales to unaffiliated customers had not

been reported. Petitioners claim that

under the Department’s regulations, it

must use the facts otherwise available

where a party withholds information

requested by the Department.

Petitioners note that CST did not

identify this reseller as an affiliate,

report its downstream sales to

unaffiliated customers or contact the

Department about the reporting of these

sales. In petitioners’ view, the

Department should apply an adverse

inference in its selection of facts

available and apply the highest rate

from the petition to the U.S. sales which

were matched to CST’s sales to this

affiliate before application of the arm’s

length test.

Respondent argues that the

Department should not apply partial

facts available for CST’s sales to this

reseller. Indeed, respondent argues that

it is not affiliated with this reseller. CST

argues that the Bozano Group is not in

a position to exercise operational

control over both CST and USIMINAS,

and that even if USIMINAS and CST are

affiliated, the Department would have to

undertake a separate analysis with

respect to the reseller in question. While

noting that USIMINAS does control this

reseller, respondent claims that there is

no basis for finding that this company

is affiliated with CST or that it is

controlled by Bozano.

Respondent argues that the

Department’s questionnaire initially

leaves it up to the respondent to identify

affiliated parties. Respondent states that

in this case, the affiliated issue was

complex, involving multiple

submissions from interested parties and

extensive analysis by the Department.

Respondent also notes that this is the

first case addressing the issue of mutual

control/affiliation under the new law.

Because CST did not purposely deceive

the Department, in respondent’s view,

there are no grounds for punishing CST

with the application of facts available.

Respondent argues that even if the

Department determines that this reseller

is affiliated with CST, the Department

should simply perform the arm’s length

test. Respondent claims that sales to this

reseller are not overly significant in

terms of margin calculations, and that

all U.S. sales that are potentially

matched to sales to this customer also

match sales to other home market

customers. Respondent argues that

downstream sales made by this reseller

are to end-users, while U.S. sales and

other home market sales are to

distributors/resellers. Finally,

respondent argues, because it does not

control the reseller in question, it could

not have obtained resale information

from this party.

Department’s Position

As noted in our response to comment

6 above, we continue to find that CST

and USIMINAS are affiliated. Given that

the reseller in question is 100 percent

owned by USIMINAS, a separate

affiliation analysis is not required.

While it is true that affiliation is a new

concept, since the issue of affiliation

was raised early in this proceeding,

respondent would have been well

advised to seek guidance on its

reporting of this reseller’s downstream

sales. Respondent did not do so.

The Department applied the arm’s

length test to CST’s sales to its affiliated

reseller. These sales failed the test.

Consequently, we did not use these

sales in the preliminary results. Because

these sales were only a small portion of

CST’s reported home market sales, we

did not ask CST to report sales made by

the affiliated reseller to the first

unaffiliated customer (downstream

sales). There were sufficient remaining

home market sales to match to U.S. sales

for the purpose of determining the

dumping margin. All the sales to the

affiliated reseller had the same

CONNUMH and date of sale. Without

these sales we found identical matches

for the same CONNUM and sale month.

Omitting these sales did not have a

distorting effect on the margin

calculation. Therefore, we have

determined for these final results that

there is no need to use facts otherwise

available.

Comment 8

Petitioners argue that the Department

should use facts available for the

difference in merchandise (difmer)

adjustment. Petitioners argue that CST

was required to provide variable and

total cost on a product-specific basis to

allow calculation of the difmer

adjustment. However, petitioners state

that CST only reported two sets of

costs—one for high manganese products

and another for low manganese

products. Petitioners argue that for

partial facts available, the Department

should select a difmer adjustment of 20

percent of total cost of manufacturing in

each case where similar (rather than

identical) products are matched. See

Porcelain-on-Steel Cookware from

Mexico, 61 FR 54616, 54617 (October

21, 1996); Certain Cold-Rolled Carbon

Steel Flat Products from Korea, 60 FR

65284, 65287 (December 19, 1995) and

Cemex, S.A. v. United States, Slip Op.

96–132, at 9 (CIT August 13, 1996).

Respondent counters that the

Department decided early in this
18492 Federal Register / Vol. 62, No. 72 / Tuesday, April 15, 1997 / Notices

proceeding that CST’s cost system was

adequate for its dumping calculations.

Respondent states that it submitted cost

data in accordance with its existing cost

accounting system. While petitioners

requested that CST provide additional

data, respondent notes that the

Department did not ask it to do so and

did not solicit CST to develop difmers

outside its cost system. Respondent

notes that the Department used the

difmer data submitted by CST to

analyze petitioners’ cost allegation and

argue that the Department would not

have used this data unless the

Department believed that CST’s existing

cost system and its submitted costs were

useful and adequate for the purpose of

this dumping proceeding. Respondent

rejects petitioners’ argument that it has

a ‘‘duty’’ to develop a methodology to

report costs that distinguish between

product characteristics and claims that

petitioners have failed to cite any

support in the dumping law or case

precedent for the proposition that this

duty exists. Respondent also notes the

Department’s long-standing preference

for the use of respondent’s existing cost

systems and cites Pineapples, in which

the Department adjusted difmer costs

for respondents because they were not

based strictly on respondent’s cost

system.

Department’s Position

We disagree with petitioners. Section

773(f)(1)(A) of the Act expresses the

Department’s preference for using a

respondent’s existing cost accounting

system when it is in accordance with

generally accepted accounting practices

(GAAP) and reasonably reflects the costs

associated with the production of the

subject merchandise. The approach

used by CST in reporting the costs of its

profile slabs, the only subject

merchandise it exported during the

POR, reasonably reflects CST’s costs.

Therefore, we did not ask CST to

provide more detailed information on

its variable and total costs of

manufacturing. The reasons for this

constitute proprietary information

contained in CST’s Section B response

of November 13, 1995, beginning at

B–37. See also the Analysis Memo of

March 31, 1997. We verified CST’s

submitted variable and total costs of

manufacturing; no discrepancies were

identified. There is no basis to apply

partial facts available in making a

difmer adjustment under these

circumstances.

Comment 9

Petitioners claim that the respondent

omitted an initial cost associated with

foreign exchange contracts, and argue

that the Department should increase the

imputed credit cost for each U.S.

customer using the ratio of the alleged

effective interest rate to the interest rate

used in the CREDITU calculation.

Respondent claims that petitioners are

confusing the concepts of an exchange

rate with an interest rate. Respondent

states that there is no one-time fee

associated with the foreign exchange

contracts, and that the proper rate to be

extracted from the contract is the

interest rate, which is what CST used in

its credit cost calculation.

Department’s Position

We agree with the respondent. The

rate the petitioners misinterpreted as an

additional interest cost is clearly an

exchange rate used to convert the value

of the foreign exchange contract in

dollars into local currency. See

Verification Exhibit 13.

Comment 10

Petitioners claim that an adjustment

must be made for quality control costs

directly associated with U.S. sales and

that CST failed to report any such costs.

Petitioners state that ultrasonic testing is

a condition of sale for U.S. sales, but not

for home market sales. Petitioners argue

that the Department has consistently

held that where a quality control

expense is a condition of sale and can

be tied to a specific market or sale, it

should be deducted as a selling expense.

See Oil Country Tubular Goods from

Argentina, 60 FR 33539, 33548 (June 28,

1995); Industrial Belts and Components

and Parts Thereof, Whether Cured or

Uncured, from Japan, 58 FR 30018,

30024 (May 25, 1993); and Stainless

Steel Sheet and Strip Products from

France, 48 FR 19441, (April 29, 1983).

As partial facts available, petitioners

urge the Department to use the cost

identified in USIMINAS’ questionnaire

response in the third administrative

review.

Respondent argues that the

Department should not make any

deductions for ultrasonic testing.

Respondent claims that petitioners’

allegation that ultrasonic testing is an

unreported selling expense is untimely,

as it is based on inferences from CST’s

technical protocols that were submitted

much earlier in the proceeding.

Respondent notes that if this argument

had been made earlier, CST would have

had an opportunity to rebut them in the

form of verifiable submissions.

Respondent asserts that ultrasonic

testing is not a direct, separately

identifiable selling expense because it is

a production overhead cost that is

reflected in cost of goods sold. While

not all of CST’s technical protocols

require ultrasonic testing, CST notes

that all profile slab is subject to

ultrasonic testing as an internal quality

control measure. Respondent also

denies that ultrasonic testing was a

condition of sale on U.S. sales.

Respondent argues that there is no

indication on the mill certificates or

U.S. customers’ orders indicating

otherwise.

Department’s Position

We agree with the respondent.

Neither the U.S. purchase orders nor the

mill certificates include any notations

concerning ultrasonic testing as a

specification.

Comment 11

Petitioners claim that the Department

should correct a ministerial error in the

calculation of the ICMS tax on home

market sales. Petitioners argue that the

Department should calculate this

amount on gross price, not net price.

Respondent states that ICMS is

applied on net price plus freight, not

gross price. Respondent argues that to

attain tax neutrality the Department is

calculating the ICMS tax on the home

market sale as if it had been exported

and that no taxes other than the reduced

ICMS tax are applied to an export sale.

Department’s Position

We agree with respondent. The ICMS

tax is not applied to gross price.

Moreover, as respondent correctly notes,

no tax other than ICMS is applied to

export sales.

Final Results of Review

As a result of our review, we have

determined that no margin exists for

Companhia Sideru ́rgica de Tubara ̃o

(CST) during the period 8/1/94–7/31/95.

The Department will issue appraisement

instructions directly to the Customs

Service.

Furthermore, the following deposit

requirements will be effective upon

publication of this notice of final results

of review for all shipments of plate from

Brazil entered, or withdrawn from

warehouse, for consumption on or after

the publication date, as provided for by

section 751(a)(1) of the Act: (1) The cash

deposit rates for the reviewed company

will be 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, or the original less than fair

value (LTFV) investigation, but the

manufacturer is, the cash deposit rate

will be the rate established for the most

recent period for the manufacturer of
Federal Register / Vol. 62, No. 72 / Tuesday, April 15, 1997 / Notices 18493

the merchandise; and (4) if neither the

exporter nor the manufacturer is a firm

covered in this review, the cash deposit

rate will be 75.54 percent. This is the

‘‘all others’’ rate from the LTFV

investigation. See Antidumping Duty

Order and Amendment of Final

Determination of Sales at Less Than

Fair Value: Certain Cut-To-Length

Carbon Steel Plate From Brazil, 58 FR

44164 (August 19, 1993). These deposit

requirements, when imposed, shall

remain in effect until publication of the

final results of the next administrative

review.

This notice serves as a final reminder

to importers of their responsibility

under § 353.26 of the Department’s

regulations 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 § 353.34(d) of the Department’s

regulations. Timely notification of

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 this

notice are in accordance with section

751(a)(1) of the Act (19 U.S.C.

1675(a)(1)) and § 353.22 of the

Department’s regulations.

Dated: April 2, 1997.

Robert S. LaRussa,

Acting Assistant Secretary for Import

Administration.

[FR Doc. 97–9428 Filed 4–14–97; 8:45 am]

BILLING CODE 3510–DS–P