[Federal Register: October 27, 2003 (Volume 68, Number 207)]
[Notices]
[Page 61185-61188]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr27oc03-36]
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DEPARTMENT OF COMMERCE
International Trade Administration
[A-351-824]
Silicomanganese From Brazil: Preliminary Results of Antidumping
Duty Administrative Review
AGENCY: Import Administration, International Trade Administration,
Department of Commerce.
ACTION: Notice of preliminary results of antidumping duty
administrative review.
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SUMMARY: The Department of Commerce is conducting an administrative
review of the antidumping duty order on silicomanganese from Brazil in
response to a request from one manufacturer/exporter, SIBRA Electro-
Siderurgica Brasileira S.A. (``SIBRA'') and Companhia Paulista de
Ferroligas (``CPFL'') (collectively ``SIBRA/CPFL'').\1\ This review
covers the period December 1, 2001, through November 30, 2002.
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\1\ We have collapsed another affiliated Brazilian producer of
silicomanganese, Urucum Mineracao (``Urucum''), with SIBRA/CPFL for
purposes of this proceeding and have calculated a single dumping
margin for them.
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We have preliminarily determined that SIBRA/CPFL made sales to the
United States at prices below normal value during the period of review.
If these preliminary results are adopted in our final results of
administrative review, we will instruct Customs and Border Protection
to assess antidumping duties on all appropriate entries. We invite
interested parties to comment on these preliminary results. Parties who
submit arguments are requested to submit with each argument (1) a
statement of the issue, and (2) a brief summary of the argument.
EFFECTIVE DATE: October 27, 2003.
FOR FURTHER INFORMATION CONTACT: Brian Ellman at (202) 482-4852 or
Katja Kravetsky at (202) 482-0108, Office of AD/CVD Enforcement 3,
Import Administration, International Trade Administration, U.S.
Department of Commerce, 14th Street and Constitution Avenue, N.W.,
Washington, D.C. 20230.
SUPPLEMENTARY INFORMATION:
Background
On December 22, 1994, the Department of Commerce (``the
Department'') published in the Federal Register the antidumping duty
order on silicomanganese from Brazil. See Notice of Antidumping Duty
Order: Silicomanganese from Brazil, 59 FR 66003. On December 2, 2002,
we published in the Federal Register a notice of opportunity to request
an administrative review of the antidumping duty order on
silicomanganese from Brazil covering the period December 1, 2001,
through November 30, 2002. See Antidumping or Countervailing Duty
Order, Finding, or Suspended Investigation; Opportunity to Request
Administrative Review, 67 FR 71533. On December 30, 2002, SIBRA/CPFL
requested that the Department conduct an administrative review of its
sales. On January 22, 2003, the Department published in the Federal
Register a notice of initiation of this antidumping duty administrative
review. See Initiation of Antidumping and Countervailing Duty
Administrative Reviews and Request for Revocation in Part, 68 FR 3009.
On August 29, 2003, the Department postponed the preliminary
results of this review until no later than October 17, 2003. See
Silicomanganese From Brazil: Extension of Time Limit for Preliminary
Results of Antidumping Duty Administrative Review, 68 FR 52895
(September 8, 2003).
The Department is conducting this review in accordance with section
751 of the Tariff Act of 1930, as amended (``the Act'').
Scope of Review
The merchandise covered by this review is silicomanganese.
Silicomanganese, which is sometimes called ferrosilicon manganese, is a
ferroalloy composed principally of manganese, silicon and iron, and
normally contains much smaller proportions of minor elements, such as
carbon, phosphorous, and sulfur. Silicomanganese generally contains by
weight not less than 4 percent iron, more than 30 percent manganese,
more than 8 percent silicon, and not more than 3 percent phosphorous.
All compositions, forms, and sizes of silicomanganese are included
within the scope of this review, including silicomanganese slag, fines,
and briquettes. Silicomanganese is used primarily in steel production
as a source of both silicon and manganese.
Silicomanganese is currently classifiable under subheading
7202.30.0000 of the Harmonized Tariff Schedule of the United States
(HTSUS). Some silicomanganese may also currently be classifiable under
HTSUS subheading 7202.99.5040. This scope
[[Page 61186]]
covers all silicomanganese, regardless of its tariff classification.
Although the HTSUS subheadings are provided for convenience and customs
purposes, the written description of the scope remains dispositive.
Verification
From August 4 through August 8, 2003, and from August 18, 2003,
through August 22, 2003, in accordance with section 782(i) of the Act,
the Department verified the sales and cost information provided by
SIBRA/CPFL using standard verification procedures, including on-site
inspection of the manufacturer's facilities, the examination of
relevant sales and financial records, and selection of original
documentation containing relevant information. Our verification results
are outlined in the public and proprietary versions of the verification
reports (``Sales Verification Report: Administrative Review of the
Antidumping Duty Order on Silicomanganese from Brazil (December 1,
2001, through November 30, 2002)'' dated October 14, 2003, (``Sales
Verification Report'') and ``Verification Report on the Cost of
Production and Constructed Value Data Submitted by SIBRA
Electrosiderurgica Brasileira S.A. (``SIBRA''), Companhia Paulista de
Ferro-Ligas (``CPFL'') and Urucum Mineracao S.A
(``Urucum'')(collectively ``SIBRA/CPFL'')'' dated October 2, 2003,
(``Cost Verification Report'') on file in the Central Records Unit
(``CRU''), Room B-099 of the main Department of Commerce building.
Collapsing
The Department's regulations under 19 CFR 351.401(f) outline the
criteria for collapsing (i.e. treating as a single entity) affiliated
producers for purposes of calculating a dumping margin. The regulations
state that we will treat two or more affiliated producers as a single
entity where (1) those producers have production facilities for similar
or identical products that would not require substantial retooling of
either facility in order to restructure manufacturing priorities, and
(2) we conclude that there is a significant potential for the
manipulation of price or production. In identifying a significant
potential for the manipulation of price or production, the Department
may consider the following factors: (i) the level of common ownership;
(ii) the extent to which managerial employees or board members of one
firm sit on the board of directors of an affiliated firm; and, (iii)
whether operations are intertwined, such as through the sharing of
sales information, involvement in production and pricing decisions, the
sharing of facilities or employees, or significant transactions between
the affiliated producers. See 19 CFR 351.401(f)(2).
Urucum is a wholly-owned subsidiary of Companhia Vale de Rio Doce
(``CVRD''); therefore, SIBRA/CPFL and Urucum are affiliated under
section 771(33)(F) of the Act, which provides that persons directly or
indirectly under common control of any person are affiliates. As for
the first criterion of 19 CFR 351.401(f), the information currently on
the record indicates that Urucum is also a producer of silicomanganese
and that SIBRA/CPFL and Urucum use similar production facilities to
produce silicomanganese. There is no evidence on the record to indicate
that substantial retooling would be required for SIBRA, CPFL, or Urucum
to restructure their manufacturing priorities.
As to whether there is significant potential for manipulation, we
find that their operations are intertwined, in that a centralized
office provides administrative and sales services in connection with
sales of silicomanganese produced by SIBRA, CPFL, and Urucum, and all
financial data for these three companies are maintained in a single
accounting system. In addition, they share directors (the president of
Urucum serves as a director at both SIBRA and CPFL), which is a clear
indication that significant potential for manipulating price and
production exists in this case. Therefore, we find that they are
affiliated for the purposes of this administrative review and that
Urucum should be collapsed with SIBRA/CPFL and considered one entity
pursuant to section 771(33) of the Act and 19 CFR 351.401(f).
Affiliation of Parties
Pursuant to section 771(33)(F) of the Act, the Department has
preliminarily determined that certain customers to whom SIBRA/CPFL sold
silicomanganese during the period of review (``POR'') and whom SIBRA/
CPFL identified as unaffiliated parties are, in fact, affiliated with
SIBRA/CPFL. Specifically, the Department has determined that SIBRA/CPFL
and some of its home market customers are under the common control of
``CVRD'', SIBRA's parent company. According to section 771(33)(F) of
the Act, two or more persons under common control with any other person
shall be considered affiliated. Thus, we have preliminarily found these
companies to be affiliated with SIBRA/CPFL. For a complete discussion
of this issue, see the October 17, 2003, memorandum entitled ``Analysis
of the Affiliation of SIBRA/CPFL with its Customers'' which is on file
in CRU.
Comparisons to Normal Value
Based on a request by the respondent in which it claimed to have
made one U.S. sale during the POR, we allowed SIBRA/CPFL to limit its
home-market sales response to the six-month period from August 2002
through January 2003. In its May 7, 2003, questionnaire response,
however, SIBRA/CPFL clarified that that it had actually made two sales
to unaffiliated U.S. customers that had a date of sale in the POR and
that it had reported sales information for only the sale with an entry
date during the POR. In accordance with 19 CFR 351.213(e)(1)(i), we
requested complete sales information with respect to both sales made to
the United States during the POR.
To determine whether sales of silicomanganese from Brazil were made
in the United States at less than normal value (``NV''), we compared
the export price (``EP'') to the NV. Because Brazil's economy
experienced significant inflation during the POR, as is Department
practice, we limited our comparisons to home-market sales made during
the same month in which the U.S. sale occurred. See ``Cost of
Production Analysis'' section below. This methodology minimizes the
extent to which calculated dumping margins are overstated or
understated due solely to price inflation that occurred in the
intervening time period between the U.S. and the home-market sales.
When making comparisons in accordance with section 771(16) of the
Act, we considered all products sold in the home market as described in
the ``Scope of the Review'' section of this notice, above, that were in
the ordinary course of trade (i.e., sales within the same month which
passed the cost test) for purposes of determining appropriate product
comparisons to U.S. sales. As there were no appropriate home market
sales of comparable merchandise, we compared the merchandise sold to
the United States to constructed value (``CV'').
Merchandise
In its questionnaire responses and at the sales verification,
SIBRA/CPFL stated that it sold three grades of silicomanganese in the
home market during the home-market sales reporting period: 12/16, 15/
20, and 16/20. According to SIBRA/CPFL's description of these grades of
silicomanganese, 12/16 has a silicon content between 12% and 16% (by
weight), 15/20 has a
[[Page 61187]]
silicon content between 15% and 20%, and 16/20 has a silicon content
between 16% and 20%.
We have preliminarily determined that there is no significant
difference between the products reported as 15/20 and 16/20 and have
treated merchandise reported by SIBRA/CPFL as grade 15/20 to be grade
16/20. As such, we weight-averaged the reported manufacturing costs for
these two grades. For more information on this topic, see ``Antidumping
Administrative Review of Silicomanganese from Brazil: Preliminary
Results Analysis Memorandum of SIBRA/CPFL'' dated October 17, 2003,
(``Preliminary Results Analysis Memo'') at page 5 and the Sales
Verification Report at pages 7-8.
Export Price
For sales to the United States, we used EP, as defined in section
772(a) of the Act, because the subject merchandise was sold directly to
the first unaffiliated purchaser in the United States prior to the date
of importation. We based EP on the price to the first unaffiliated
purchaser in the United States. We made deductions, where appropriate,
consistent with section 772(c)(2)(a) of the Act, for movement expense.
Normal Value
A. Home Market Viability
In order to determine whether there was a sufficient volume of
sales in the home market to serve as a viable basis for calculating NV,
we compared SIBRA/CPFL's volume of home-market sales of the foreign
like product to the volume of U.S. sales of the subject merchandise in
accordance with section 773(a)(1)(C) of the Act. Since SIBRA/CPFL's
aggregate volume of home-market sales of the foreign like product was
greater than five percent of its aggregate volume of U.S. sales of the
subject merchandise, we determined that the home market is viable.
Therefore, we examined home-market sales for purposes of calculating NV
B. Arm's-Length Sales
SIBRA/CPFL made sales in the home market to affiliated and
unaffiliated customers. To test whether the sales to affiliates were
made at arm's length prices, we compared the starting prices of sales
to affiliated and unaffiliated customers net of all direct selling
expenses, movement expenses, and taxes. Where the price to the
affiliated party was, on average, within a range of 98 to 102 percent
of the price of the same or comparable merchandise to the unaffiliated
parties, we determined that the sales made to the affiliated party were
at arm's length. See Modification Concerning Affiliated Party Sales in
the Comparison Market, 67 FR 69186 (November 15, 2002). In accordance
with the Department's practice, we only included in our margin analysis
those sales to affiliated parties that were made at arm's length.
C. Cost of Production Analysis
Because the Department disregarded all of SIBRA/CPFL's home-market
sales that failed the cost test in the most recently completed
administrative review, pursuant to section 773(b)(2)(A)(ii) of the Act,
we had reasonable grounds to believe or suspect that sales in this POR
were made at prices below the cost of production (``COP''). Therefore,
the Department initiated a COP investigation for SIBRA/CPFL.Based on
the respondent's request, we adjusted the cost-reporting period to
correspond with the 2002 calendar year. See letter from Laurie
Parkhill, Office Director to SIBRA/CPFL dated March 21, 2003. Upon
initial evaluation of inflation in Brazil during the POR, we determined
that we would use a high-inflation methodology to calculate COP and
issued to the respondent a high-inflation questionnaire.
Before making any fair-value comparisons, we conducted the COP
analysis described below.
1. Calculation of COP
We calculated COP, in accordance with section 773(b)(3) of the Act,
based on the sum of the costs of materials and fabrication employed in
producing the foreign like product, plus amounts for home-market
selling, general, and administrative (``SG&A'') expenses. As specified
above, we determined that the Brazilian economy experienced significant
inflation during the POR. Therefore, in order to avoid the distortive
effect of inflation in our comparison of costs and prices, we requested
that SIBRA/CPFL submit the product-specific cost of manufacturing
(``COM'') incurred during each month of the period for which it
reported home-market sales. We then calculated an average COM for each
product after indexing the reported monthly costs to an equivalent
currency level using the Brazilian IGP-M inflation index. We then
restated the average COM in the currency value of each respective
month.
For the preliminary results of review, we relied on COP information
submitted by SIBRA/CPFL in its questionnaire responses, except, as
noted below, in specific instances where the submitted costs were not
appropriately quantified or valued:
a. We weight-averaged the reported manufacturing costs for grade
16/20 silicomanganese and grade 15/20 silicomanganese in accordance
with the revised grade classifications described in the ``Merchandise''
section above.
b. We adjusted SIBRA/CPFL's reported COM to account for purchases
of manganese ore from affiliated parties at non-arm's length prices.
See ``Cost of Production and Constructed Value Calculation Adjustments
for the Preliminary Results'' dated October 17, 2003, (``Calculation
Memo'') on file in CRU.
c. We adjusted SIBRA/CPFL's reported COM to reflect the actual
depreciation costs recorded in the financial accounting system. See
Calculation Memo.
d. We adjusted SIBRA/CPFL's submitted general and administrative
expenses to exclude double-counted depreciation expenses and income and
expense items related to ICMS taxes, PIS/COFINS taxes, and investments.
We also redistributed charcoal forest exhaustion costs in order to
properly index these costs for inflation. See Calculation Memo.
e. We recalculated SIBRA/CPFL's submitted financial expense ratio
based on CVRD's 2002 consolidated financial statements prepared in
accordance with Brazilian GAAP. Due to the significant devaluation of
the Brazilian Real during the fiscal year, CVRD experienced a large net
foreign exchange loss in 2002. We therefore adjusted the financial
expense ratio to reflect a normalized net foreign exchange loss based
on CVRD's average experience over the five-year period from 1998 to
2002. In addition, we adjusted SIBRA/CPFL's financial income offset to
exclude interest income from accounts receivable and interest income
from long-term interest sources. See Calculation Memo.
2.Test of Home Market Prices
In determining whether to disregard home-market sales made at
prices below the COP, we examined whether: (1) within an extended
period of time, such sales were made in substantial quantities, and (2)
such sales were made at prices which permitted recovery of all costs
within a reasonable period of time in accordance with section
773(b)(1)(A) and (B) of the Act. We compared model-specific COPs to the
reported home-
[[Page 61188]]
market prices less any applicable movement charges and selling expense.
3. Results of the COP Test
Pursuant to section 773(b)(2)(C) of the Act, where 20 percent or
more of the respondent's sales of a given product during the six-month
period surrounding the U.S. sales were at prices less than the COP, in
accordance with sections 773(b)(2)(B) and (C) of the Act, we
disregarded the below-cost sales because we determined that the below-
cost sales were made within an extended period of time in ``substantial
quantities.'' In such cases, we also determined that such sales were
not made at prices that would permit recovery of all costs within a
reasonable period of time in accordance with section 773(b)(2)(D) of
the Act. Based on this test, we disregarded below-cost sales in our
analysis.
D. Calculation of NV based on CV
Because we were unable to find a home-market sale made in the
ordinary course of trade for a comparison to EP, in accordance with
section 773(a)(4) of the Act, we based NV on CV. We calculated CV based
on SIBRA/CPFL's cost of materials, fabrication employed in producing
the subject merchandise, and SG&A, including interest expenses and
profit. We calculated the COP component of CV as noted above in the
``Calculation of COP'' section of this notice. In accordance with
section 773(e)(2)(B)(iii) of the Act, we calculated CV profit using the
information contained in the 2002 financial statements of Maringa S.A.
Cimento e Ferro-Liga, another Brazilian producer of silicomanganese.
See Calculation Memo. For selling expenses, we used the actual
weighted-average home market direct and indirect selling expenses. We
made the same adjustments to CV as described in the COP section above.
During the POR, SIBRA/CPFL did not recover all of the ICMS/IPI
taxes that it paid on material purchases through its home-market sales.
We therefore calculated a weighted-average per-unit ICMS/IPI tax cost
for unrecovered taxes paid during the POR. Section 773(e) of the Act
states, ``the cost of materials shall be determined without regard to
any internal tax in the exporting country imposed on such materials or
their disposition which are remitted or refunded upon exportation of
the subject merchandise produced from such materials.'' We verified
that the Brazilian government gave SIBRA/CPFL a credit for the amount
of PIS/COFINS taxes paid on inputs used to produce exported
merchandise. Additionally, indicates that SIBRA/CPFL was able to use
the entire amount of its PIS/COFINS credit due to the high volume of
home-market sales in the month subsequent to the month of the U.S.
sales. In accordance with the Act, we therefore calculated a weighted-
average per-unit PIS/COFINS export rebate and deducted the amount of
this rebate from CV. See Calculation Memo.
Currency Conversions
Because this proceeding involves a high-inflation economy, we
limited our comparison of U.S. and home-market sales to those occurring
in the same month and only used daily exchange rates.
The Department's preferred source for daily exchange rates is the
Federal Reserve Bank. However, the Federal Reserve Bank does not track
or publish exchange rates for the Brazilian Real. Therefore, we made
currency conversions based on the daily exchange rates from Factiva, a
Dow Jones & Reuters Retrieval Service.
Preliminary Results of Review
As a result of our review, we preliminarily determine that a margin
of 2.12 percent exists for SIBRA/CPFL/Urucum for the period December 1,
2001, through November 30, 2002. Pursuant to 19 CFR 351.224(b), the
Department will disclose to parties calculations performed in
connection with these preliminary results within five days of the date
of publication of this notice. Any interested party may request a
hearing within 30 days of publication of this notice. A hearing, if
requested, will be held at the main Commerce Department building three
business days after submission of rebuttal briefs.
Issues raised in hearings will be limited to those raised in the
respective case and rebuttal briefs. Case briefs from interested
parties may be filed no later than 30 days after publication of this
notice. Rebuttal briefs, limited to the issues raised in case briefs,
may be submitted no later than five days after the deadline for filing
case briefs. Parties who submit case or rebuttal briefs in this
proceeding are requested to submit with each argument (1) a statement
of the issue, and (2) a brief summary of the argument with an
electronic version included.
The Department will publish a notice of final results of this
administrative review, which will include the results of its analysis
of issues raised in any such comments or at a hearing, within 120 days
from the publication of these preliminary results.
The Department shall determine, and Customs and Border Protection
(``CBP'') shall assess, antidumping duties on all appropriate entries.
Upon completion of this review, the Department will issue appraisement
instructions directly to the CBP.
Furthermore, the following deposit requirements will be effective
upon publication of the final results of this administrative review for
all shipments of silicomanganese 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: (1) The cash deposit rate for
the reviewed company will be the rate established in the final results
of this review; (2) for merchandise exported by producers or exporters
not covered in this review but covered in the original less-than-fair-
value (``LTFV'') investigation, the cash deposit will continue to be
the most recent rate published in the final determination or final
results for which the producer or exporter received an individual rate;
(3) if the exporter is not a firm covered in this review, or the
original LTFV investigation, but the producer is, the cash deposit rate
will be the rate established for the most recent period for the
producer of the merchandise; and (4) if neither the exporter nor the
producer is a firm covered in this or any previous review, the cash
deposit rate shall be 17.60 percent, the all-others rate established in
the LTFV investigation. See Notice of Final Determination of Sales at
Less than Fair Value: Silicomanganese from Brazil, 59 FR 55432
(November 7, 1994). 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 preliminary reminder to importers of their
responsibility under 19 CFR 351.402(f) to file a certificate regarding
the reimbursement of antidumping duties prior to liquidation of the
relevant entries during this review period. Failure to comply with this
requirement could result in the Secretary's presumption that
reimbursement of antidumping duties occurred and the subsequent
assessment of double antidumping duties.
This administrative review and notice are in accordance with
sections 751(a)(1) and 777(i)(1) of the Act.
Dated: October 17, 2003.
James J. Jochum,
Assistant Secretary for Import Administration.
[FR Doc. 03-27042 Filed 10-24-03; 8:45 am]