Ferrosilicon From Brazil; Final Results of Antidumping Duty Administrative Review

DEPARTMENT OF COMMERCE

[A-351-820]

Ferrosilicon 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.

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SUMMARY: On May 8, 1996, the Department of Commerce (the Department)

published the preliminary results of its administrative review of the

antidumping duty order on Ferrosilicon from Brazil. The review covers

exports of this merchandise to the United States by one manufacturer/

exporter, Companhia de Ferro Ligas da Bahia (Ferbasa), for the period

August 16, 1993 through February 28, 1995.

We gave interested parties an opportunity to comment on our

preliminary results. Based on our analysis of the comments received, we

have revised our calculations for these final results.

EFFECTIVE DATE: November 22, 1996.

FOR FURTHER INFORMATION CONTACT:

Wendy Frankel, Office of AD/CVD Enforcement, Group II, Import

Administration, International Trade Administration, U.S. Department of

Commerce, 14th Street and Constitution Avenue, NW., Washington, DC

20230; telephone: (202) 482-5849.

SUPPLEMENTARY INFORMATION:

Applicable Statute and Regulations

Unless otherwise indicated, all citations to the statute are

references to the provisions effective January 1, 1995, the effective

date of the amendments to the Tariff Act of 1930 (the 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).

Background

On May 8, 1996, the Department (the Department) published in the

Federal Register (61 FR 20793) the preliminary results of its

administrative review of the antidumping duty order on ferrosilicon

from Brazil. The antidumping duty order on ferrosilicon from Brazil was

published March 14, 1994 (59 FR 11769). The review covers the period

August 16, 1993 through February 28, 1995.

Scope of the Review

The merchandise subject to this review is ferrosilicon, a

ferroalloy generally containing, by weight, not less than four percent

iron, more than eight percent but not more than 96 percent silicon, not

more than 10 percent chromium, not more than 30 percent manganese, not

more than three percent phosphorous, less than 2.75 percent magnesium,

and not more than 10 percent calcium or any other element.

Ferrosilicon is a ferroalloy produced by combining silicon and iron

through smelting in a submerged-arc furnace. Ferrosilicon is used

primarily as an alloying agent in the production of steel and cast

iron. It is also used in the steel industry as a deoxidizer and a

reducing agent, and by cast iron producers as an inoculant.

Ferrosilicon is differentiated by size and by grade. The sizes

express the maximum and minimum dimensions of the lumps of ferrosilicon

found in a given shipment. Ferrosilicon grades are defined by the

percentages by weight of contained silicon and other minor elements.

Ferrosilicon is most commonly sold to the iron and steel industries in

standard grades of 75 percent and 50 percent ferrosilicon. Calcium

silicon, ferrocalcium silicon, and magnesium ferrosilicon are

specifically excluded from the scope of this review.

Calcium silicon is an alloy containing, by weight, not more than

five percent iron, 60 to 65 percent silicon, and 28 to 32 percent

calcium. Ferrocalcium silicon is a ferroalloy containing, by weight,

not less than four percent iron, 60 to 65 percent silicon, and more

than 10 percent calcium. Magnesium ferrosilicon is a ferroalloy

containing, by weight, not less than four percent iron, not more than

55 percent silicon, and not less than 2.75 percent magnesium.

Ferrosilicon is currently classifiable under the following

subheadings of the Harmonized Tariff Schedule of the United States

(HTSUS): 7202.21.1000, 7202.21.5000, 7202.21.7500, 7202.21.9000,

7202.29.0010, and 7202.29.0050. Although the HTSUS subheadings are

provided for convenience and customs purposes, our written description

of the scope of this review is dispositive.

Ferrosilicon in the form of slag is included within the scope of

this review if it meets, in general, the chemical content definition

stated above and is capable of being used as ferrosilicon. Parties that

believe their importations of slag do not meet these definitions should

contact the Department and request a scope determination.

Analysis of Comments Received

We received case and rebuttal briefs from the petitioners, Aimcor

and SKW Metals & Alloys, Inc. and from the respondent, Ferbasa. At the

request of the petitioners, we held a hearing on June 26, 1996.

Comment 1: The petitioners argue that Brazil's economy was

hyperinflationary during the period of review (POR). According to the

petitioners, over the 18\1/2\ month POR the inflation rate in Brazil

was 3,927 percent which greatly exceeds the Department's 60 percent

threshold for determining if an economy is hyperinflationary.

Petitioners agree with Ferbasa, however, that during the six-month

period (September 1994 through February 1995) for which Ferbasa

reported sales and cost data, inflation rates in Brazil were below the

hyperinflationary levels. Notwithstanding this fact, petitioners argue

that inflation rates in Brazil were between 38.86 percent and 44.78

percent per month during the preceding seven months, all of which are

in the POR, and that Ferbasa's reported direct materials costs were

distorted by this hyperinflation since the materials are inventoried

and valued at the time of purchase, but not used in production until

some later time.

Petitioners claim that respondent's own data shows that monthly

inventory costs increased dramatically over the inflation rate for this

period and thus demonstrates the resultant distortion. To eliminate the

distortive effects of hyperinflation on Ferbasa's direct materials

costs during the POR, the petitioners argue that for the final results,

the Department should follow its established hyperinflationary economy

practice of determining monthly costs of production (COP), constructed

values (CV) and normal value (NV).

Citing the Final Determination of Sales at Less Than Fair Value:

Silicon Metal from Brazil, 56 FR 26,979 (June 12, 1991) (Silicon Metal

from Brazil, LTFV), the petitioners contend that the Department should

follow its established practice and use replacement costs rather than

historical costs when evaluating dumping from a hyperinflationary

economy.

Ferbasa asserts that in its April 10, 1996 submission it provided

substantial evidence to support its contention that

[[Page 59408]]

Brazil was not a hyperinflationary economy during the relevant portion

of this review period. Citing petitioners' June 10, 1996, case brief

(p. 29), Ferbasa notes that petitioners acknowledged that Brazil's

economy was not hyperinflationary during the six months for which

Ferbasa reported home market sales and cost data. Ferbasa argues that

for these reasons the Department should continue to use six-month

weighted average costs for the final results of review.

Department's Position: Petitioners seek to invoke the Department's

practice in hyperinflationary economies, which calls for the use of

replacement costs in calculating the cost of production. This

methodology recognizes that in a hyperinflationary economy it is not

useful to evaluate operating results and financial position in the

local currency without restatement. Money loses purchasing power at

such a rate that comparison of amounts from transactions and other

events occurring at different times is misleading. In cases where the

respondent experiences hyperinflation in the comparison market during

the period of review (POR), the Department requires that the respondent

report current costs for the calculation of COP and CV. This

methodology entails valuing any materials used to produce the subject

merchandise at the average purchase price of those materials during the

month of consumption (i.e., the normal inventory value of raw materials

is replaced by the average purchase price for the month in which the

materials were consumed). Labor and overhead costs are reported at the

actual monthly amount incurred during the month of shipment. See Final

Determination of Sales at Less Than Fair Value: Silicomanganese from

Venezuela, 59 FR 55,437, 55441 (November 7, 1994); Final Determination

of Sales at Less Than Fair Value: Nitrocellulose from Yugoslavia, 55 FR

34,946 (August 27, 1990) and Tubeless Steel Disc Wheels from Brazil 52

FR 6947 (March 20, 1987).

In the present case, the sales at issue occurred during the last

six months of the review period (i.e., September 1, 1994 through

February 28, 1995). The Brazilian economy experienced significant

inflation from September 1993 through June 1994. However, based on our

examination of the annualized rate of inflation for September 1994

through February 1995, we have determined that there was no

hyperinflation during this time, as the annualized rate of inflation

for this six-month period was less than 20 percent. Petitioners'

arguments that raw materials consumed during the segment of the review

period where costs are calculated may have been purchased during a

period of hyperinflation is speculative and not supported by facts on

the record of this case. The home market sales in question occurred

fully two months after the period of hyperinflation ended. We concluded

that, based upon the company's inventory turnover rate of approximately

one month, Ferbasa produced ferrosilicon for these sales at most

approximately one month earlier (i.e., at a time when the Brazilian

economy was not hyperinflationary). Therefore, because the record

supports the conclusion that sales in question were produced in a non-

hyperinflationary period, we can reasonably conclude, absent evidence

to the contrary, that the costs were not distorted by hyperinflation.

Accordingly, consistent with the Department's policy, we have not

applied a current cost methodology because hyperinflation did not

affect the cost of the sales at issue. See the Preliminary Results of

Antidumping Duty Administrative Review: Gray Portland Cement and

Clinker from Mexico, 61 FR 51676, 51681 (October 3, 1996).

Comment 2: The petitioners contend that Ferbasa failed to follow

the Department's explicit instructions to report replacement costs for

purposes of calculating COP and CV. The petitioners note that in its

original cost response, Ferbasa stated that there were no differences

between the costs maintained in Ferbasa's normal cost accounting and

financial accounting system and the costs submitted to the Department.

The petitioners further note that Ferbasa stated that the costs

recorded in its accounting system are historical costs. According to

the petitioners, Ferbasa stated that for purposes of reporting costs to

the Department, it used a weighted-average monthly cost of inventory

(that had not been adjusted for inflation) which the company explained

``is essentially the weighted-average purchase price of each material

at the time the material is placed in inventory.'' In other words the

petitioners argue, Ferbasa reported historical material costs.

Although Ferbasa stated that it had reported materials costs on a

replacement cost basis in its supplemental cost response, petitioners

assert that the reported direct materials costs in that response were

identical to the costs reported in the original cost response. Finally,

petitioners contend that had Ferbasa reported replacement costs, such

costs would be expected to fluctuate at approximately the same rate as

inflation; however, Ferbasa's reported materials costs did not appear

to do this. Petitioners conclude, therefore, that Ferbasa did not

report replacement costs.

Ferbasa contends that the monthly materials cost data provided in

its COP responses reflect current material input prices for each month.

Ferbasa states that the petitioners' contented that Ferbasa's monthly

direct materials costs from September 1994 through February 1995 far

exceeded the rate of inflation of 10 percent is misleading and

deceptive. According to Ferbasa, the petitioners wrongfully based their

contention on the total consumption value of direct materials used in

the production of ferrosilicon as reported in Exhibit D-14 of Ferbasa's

March 27, 1996, supplemental COP response. Ferbasa argues that the

total consumption value of each material input reported therein depends

on the quantity of the material input used in the production of

ferrosilicon and reveals nothing regarding the average price of these

materials in each month. Thus, Ferbasa contends that the petitioners'

assertion is without basis and should be rejected outright.

Department's Position: The Department has determined not to treat

Brazil as a hyperinflationary economy in this review and therefore it

is not appropriate to use a replacement cost methodology for purposes

of determining material costs. (See the Department's position with

regard to Comment 1.) Thus, the failure to report replacement costs is

moot because the information is not necessary.

With regard to the costs reported by Ferbasa in its questionnaire

response, we note that Ferbasa has repeatedly stated that it reported

costs directly from its internal books and records; these books and

records are kept in a manner that is consistent with Brazilian

generally accepted accounting principles (GAAP). It is established

Department practice to accept costs taken directly from a respondent's

accounting system when that system is in accordance with the foreign

country's GAAP and it is clear that the figures reported do not distort

the dumping calculations. See section 773(f)(1)(A) of the Act and the

Statement of Administrative Action (H.R. Doc. No. 316, Vol. I, 103rd

Congress, 2nd Sess. (1994)) (SAA), pp. 164-165 See also, Finally

Determination of Sales at Less Than Fair Value: Certain Pasta from

Italy, 61 FR 30326, 30354 (June 14, 1996); Final Determination of Sales

at Less Than Fair Value: Fresh Cut Roses From Columbia, 60 FR 6981

(February

[[Page 59409]]

6, 1995) (Roses, LTFV); Final Determination of Sales at Less Than Fair

Value: Small Diameter Circular Seamless Pipe from Italy, 60 FR 31981

(June 19, 1995); Certain cut-to-Length Carbon Steel Plate from Germany:

Final Results of Antidumping Duty Administrative Review, 61 FR 13834

(March 28, 1996); and Final Determination of Sales at Less Than Fair

Value: Certain Canned Pineapple Fruit Thailand, 60 FR 29553 (June 5,

1995).

Comment 3: According to the petitioners, Ferbasa repeatedly failed

to comply with the Department's explicit and repeated instructions to

prepare a worksheet reconciling the reported cost of manufacturing

(COM) for ferrosilicon to its internal books and records. The

petitioners argue that Ferbasa's failure to provide this reconciliation

creates serious impediment to proper analysis of the validity of

Ferbasa's reported costs.

Ferbasa contends that the petitioners' allegation results from a

basic misunderstanding of Ferbasa's reporting methodology, since, as

stated in its March 1, 1996 COP response, Ferbasa affirms that the COM

reported to the Department in response to the dumping questionnaire

reflects the values in its regular accounting records (i.e., the

monthly inventory value and the reported monthly COMs of ferrosilicon

are the same).

Department's Position: As we noted earlier, Ferbasa has stated in

various earlier submissions that the cost figures reported to the

Department directly reflect the costs recorded in its financial

statements and thus no reconciliation is necessary since the values are

the same. It is established Department practice to accept costs taken

directly from a respondent's accounting system when that system is in

accordance with the foreign country's GAAP and it is clear that the

figures reported do not distort the dumping calculations. See the

Department's Position with regard to Comment 2.

Comment 4: Citing section 776(a)(2) of the Act, the petitioners

argue that the statute requires the Department to use the facts

otherwise available ``if an interested party * * * withholds

information that has been requested [or] significantly impedes a

proceeding.'' Citing Sparklers from the People's Republic of China;

Preliminary Results of Antidumping Duty Administrative Review, 61 FR

15,464-5 (April 8, 1996), petitioners contend, moreover, that the

statute codifies the Department's practice of applying an adverse

inference in selecting from the facts otherwise available where a party

has ``failed to cooperate by not acting to the best of its ability to

comply with a request for information.''

The petitioners contend that Ferbasa failed to comply with the

Department's specific information requests and withheld necessary

information available to it, thus significantly impeding this

proceeding. More specifically, the petitioners contend that Ferbasa

failed to provide: Materials replacement costs, a reconciliation of its

reported costs to the inventory values in its normal books and records,

supporting documentation for the reconciliation, and taxes on

electricity. In addition, the petitioners assert that Ferbasa made

misleading and conflicting statements regarding the basis of its

reported costs. According to the petitioners, either Ferbasa did not

report replacement costs, or did not provide the necessary

reconciliation. Thus, petitioners conclude, under either scenario,

there exists a fundamental deficiency in Ferbasa's response that

``invalidates the reported data and prevents the Department from making

a proper dumping margin calculation.'' (Petitioners brief at 15).

For these reasons, argue petitioners, the Department should find

Ferbasa to be a noncooperative respondent and should establish a margin

based on the total adverse facts available.

Ferbasa contends that the petitioners' assertion that the

Department should find Ferbasa a noncooperative respondent and

determine a dumping margin for Ferbasa based on the total adverse facts

available is without basis and should be rejected outright. Ferbasa

contends that it has fully cooperated with the Department by responding

to all the instructions in the original and supplemental questionnaires

in a timely manner. Finally, Ferbasa notes that its sales and cost of

production responses contain detailed information which reconciles to

it's financial statements.

Department's Position: As noted in the Department's Position with

regard to Comments 2 and 3, we do not agree with the petitioners'

assertion that Ferbasa has failed to provide appropriate cost data. Nor

do we agree that Ferbasa failed to comply with the Department's

requests to a degree that results in a significant impediment to this

proceeding. As discussed below, there are several items for which we do

not have complete information on the record. Where this has occurred we

have used the facts otherwise available to fill these minor gaps as

stipulated by section 776(a)(2) of the Act. Because the gaps are not

substantial and thus do not affect the integrity of the response to the

missing items. In addition, we note that these facts available

insertions are non-adverse, as we did not find that Ferbasa ``failed to

cooperate by not acting to the best of its ability.'' See, Final

Determination of Sales at Less Than Fair Value: Pasta from Italy, 61 FR

30326, 30329 (June 14, 1996).

We address the individual items for which we applied facts

available in our discussions below in response to the comments raised

by the respondent and the petitioners. However, because we used price-

to-price comparisons for the preliminary results of review,neither

party addressed the issue of profit for purposes of calculating CV. For

profit, we used an alternative method under section 773(e)(2)(B)(iii)

of the Act, because we had no information that would permit us to use

any of the other alternatives under section 773(e)(2). We could not

calculate the ``profit cap'' prescribed by section 773(e)(2)(B)(iii)

based on sales for consumption in the ``foreign country'' of

merchandise that is in the same general category of products as the

subject merchandise because we had no such information. Instead, we

applied section 773(e)(2)(B)(iii) on the basis of the facts available

(section 776(b)( of the Act). The only information available for these

final results for Ferbasa was the profit realized by the respondent as

shown in the company's 1994 fiscal year audited financial statement.

Comment 5: The petitioners contend that in the preliminary results

the Department improperly added the imputed credit expenses that

Ferbasa reported in its revised home market sales listing to Ferbasa's

home market prices before using those prices in its sales-below-cost

comparison test and in determining NV.

Petitioners assert that the Department calculates home market

credit expenses solely for the purpose of making a circumstance-of-sale

adjustment for differences between home market and U.S. prices relating

to terms of payment; no imputed credit expense adjustment to home

market price is made for comparison of home market prices to COP.

Petitioners note that, in the preliminary results analysis

memorandum, the Department stated that Ferbasa's reported credit costs

represent ``upward adjustments to price that Ferbasa made when the

payment terms of sale were in excess of 30 days,'' which should be

included in the calculation of home market prices. However, petitioners

also note that for sales with payment terms in excess of 30 days,

Ferbasa charged its customers for late payment terms and included those

charges in the reported prices.

[[Page 59410]]

Thus, petitioners argue, the Department should not add imputed

credit expenses to home market prices for either the calculation of NV

or for comparison of home market prices to COP.

Ferbasa contends that the Department incorrectly added an amount

for credit expenses to the reported home market prices in its

calculation of NV. Ferbasa suggests that the Department correct this

error by subtracting the home market credit expense from the reported

home market sales price in the calculation of NV.

Department's Position: We agree with petitioners and respondent

that the Department inappropriately added credit expenses to home

market prices for purposes of comparing home market prices to COP and

calculating NV. For the preliminary results of review, we inaccurately

concluded that the reported imputed home market credit expenses

represented a charge by Ferbasa to its customers on sales with payment

terms in excess of 30 days which should be added to home market prices.

However, we have reviewed the record and determined that charges to

customers with such payment terms were already included in the prices

reported by Ferbasa.

We also agree with petitioners that no imputed expense adjustments

are made to home market prices for comparison to COP. See the

Department's March 25, 1994, Policy Bulletin 94.6 Treatment of

adjustments and selling expenses in calculating the cost of production

(COP) and constructed value (CV). Therefore, for these final results of

review we have not added any home market credit expenses to home market

sales prices in calculating NV or in comparing home market prices to

COP.

Comment 6: The petitioners argue that it is inappropriate for the

Department to calculate home market imputed credit expenses for Ferbasa

using gross unit prices which are inclusive of credit revenues and ICMS

and IPI taxes.

Petitioners state that since Ferbasa does not incur an opportunity

cost with regard to late payment charges, such charges should not be

included in the basis for the calculation of imputed credit expenses.

Rather, the petitioners argue that imputed credit expenses should be

calculated by applying the short-term borrowing rate to the period

during which credit is extended to the purchaser against a price that

is net of late payment charges.

Citing the Final Determination of Sales at Less Than Fair Value:

Calcium Aluminate Cement, Cement Clinker and Flux From France (Calcium

Aluminate from France, LTFV), 58 FR 14,13, 14,139, 14,146 (March 25,

1994), petitioners maintain that with regard to taxes, it is the

Department's established practice to exclude taxes from the prices used

in calculating imputed credit expenses. Thus, for the final results,

the petitioners contend that the Department should exclude the amounts

Ferbasa charged its customers for granting late payments terms and the

amount of ICMS and IPI taxes paid from the home market prices used to

calculate home market imputed credit expenses.

Ferbasa argues that in the final results the Department should

continue to use the actual home market credit expenses as reported in

the questionnaire response. In addition, Ferbasa supports the

Department's preliminary calculation of imputed credit expenses, noting

that a seller incurs an opportunity cost with regard to the total sales

prices of its merchandise.

Department's Position: We agree in part with both petitioners and

respondent. Concerning the issue of taxes, we note that there is no

statutory or regulatory basis for including these taxes in the

calculation of the credit adjustment. See Calcium Aluminate from

France, LTFV. While there may be an opportunity cost associated with

extending credit on the payment of prices inclusive of taxes, that fact

alone is not a sufficient basis for the Department to make an

adjustment. We note that virtually every expenses associated with sales

is paid for at some point after the cost is incurred. Accordingly, for

each post-service payment, there is also an opportunity cost. Thus, to

allow the type of adjustment suggested by respondent would imply that

in the future the Department would be faced with the impossible task of

trying to determine the opportunity cost of every freight charge,

rebate, and selling expense for each sale reported. This exercise would

make our calculations inordinately complicated, placing an unreasonable

and onerous burden on both respondents and the Department. See also,

Final Determination of Sales at Less Than Fair Value: Sulfur Dyes,

Including Sulfur Vat Dyes, from the United Kingdom, 58 FR 3253 (January

8, 1993). With regard to late payment charges, we note that Ferbasa has

stated that these charges reflect the amount actually paid by the

customers as part of the invoice price. The Department calculates

imputed credit expenses to capture the opportunity cost associated with

not having received payment and not having the merchandise. The fact

that the invoice price is increased when the payment terms are in

excess of 30 days does not negate the fact of the opportunity cost

associated with the transaction.

Accordingly, we have recalculated home market imputed credit

expenses by excluding only the ICMS and IPI taxes included in gross

home market prices.

Comment 7: The petitioners note that when the Department performs

an analysis of whether home markets sales were sold below cost, it

compares home market prices and COP on an ``apples-to-apples'' basis.

Accordingly, the Department either includes or excludes an item from

both the COP and the home market prices used in the comparison. The

petitioners contend, however, that the Department's preliminary results

did not reflect this practice, because the home market prices used by

the Department in the sales-below-cost comparison included ICMS and IPI

taxes but the COP was exclusive of these same taxes. The petitioners,

therefore, contend that the comparison was not an ``apples-to-apples''

basis.

To correct this error, petitioners assert that the Department

should exclude the amount of these taxes from both the home market

prices and the COP in the sales-below-cost test.

Department's Position: We agree with petitioners that the

Department erroneously compared a tax-inclusive home market price to a

tax-exclusive COP for purposes of determining sales below cost. In

order to effectuate a fair comparison, it is the Department's practice

to compare prices and COP on the same basis. As discussed in the March

25, 1994 policy bulletin 94.6, ``[b]oth the net COP and the net home-

market prices should be on the same basis * * * otherwise, the

comparison would be distorted.'' Consequently, for these final results

of review, we have corrected our calculations and have compared a tax-

exclusive COP to tax-exclusive home market prices.

Comment 8: The petitioners contend that in reporting transfer

prices for purchases of eucalyptus charcoal from affiliated companies,

Ferbasa ignored the Department's instructions to ``report the value of

the actual eucalyptus charcoal consumed in production on the basis of

actual costs of affiliated producers.'' The petitioners further contend

that Ferbasa failed to respond to the Department's instructions to

report the value of its iron ore purchased from affiliated producers on

the basis of the prices charged for iron ore by unaffiliated suppliers.

The petitioners argue that these instructions are in accordance

with Department practice and sections 773(f) (2) and (3) of the

statute, which state

[[Page 59411]]

that if the transfer price of a major input ``is less than the cost

production of such input'' the Department may determine the value of

the input ``on the basis of the * * * cost of production.''

Instead, according to the petitioners, Ferbasa calculated two

incorrect adjustments to all materials costs, based on ratios relating

solely to costs and prices of eucalyptus charcoal and iron ore.

For the final results, the petitioners contend that the Department

should calculate monthly weighted-average costs of eucalyptus charcoal

based on the COP and volume of eucalyptus charcoal purchases from

affiliated suppliers and the price and volume of eucalyptus charcoal

purchases from unaffiliated suppliers.

To determine the cost of iron ore consumed by Ferbasa in each

month, petitioners contend that the Department should: first, determine

the total monthly consumption of iron ore by dividing the reported

total value of iron ore used in ferrosilicon production by the

weighted-average input price reported by Ferbasa for each month;

second, multiply the resultant monthly consumption of iron ore by the

weighted-average monthly price paid for iron-ore from unaffiliated

suppliers to derive the monthly total cost of iron ore; and third,

divide this amount by the production quantity in the month to determine

the per-unit cost of iron ore.

Ferbasa contends that the petitioners' comments reflect a basic

misunderstanding of the methodology Ferbasa used to calculate its

reported eucalyptus charcoal and iron ore costs. Ferbasa states that it

has exhaustively explained its calculation methodology in its original

and supplemental COP responses. Moreover, Ferbasa argues, the

Department found this methodology reasonable and accepted it for its

preliminary results. Ferbasa notes, however, that if the Department

should decide in the alternative to recalculate the multipliers based

on the ``total volume'' of charcoal eucalyptus and iron ore purchased

from affiliated suppliers, it provided this information in Exhibits D-

13 and D-15 of the supplemental COP response.

Department's Position: We agree with petitioners that Ferbasa

initially misreported the material costs for eucalyptus charcoal and

iron ore by partly relying on affiliated party transfer prices for

these inputs that did not represent arms-length prices. We also agree

that Ferbasa then inappropriately adjusted all materials costs by using

multipliers based on purchases of eucalyptus charcoal and iron ore.

In accordance with sections 773(f)(2) and (3) of the Act, the

Department's practice is to first test whether transfer prices between

affiliated suppliers represent arm's-length transactions. For major

inputs we use the transfer price if it is shown to be at arm's length

and not below the cost of production; however, we use the affiliated

supplier's cost of producing the input when the amount represented as

the transfer price of such input is less than the cost of producing the

input. See Notice of Final Determination of Sales At Less Than Fair

Value: Large Newspaper Printing Presses and Components Thereof; Whether

Assembled or Unassembled from Japan, 61 FR 38129, 38162 (July 23,

1996), and Certain Cold-Rolled and Corrosion-Resistant Carbon Steel

Flat Products from Korea: Preliminary Results of Antidumping Duty

Administrative Reviews, 61 FR 51882, 51887 (October 4, 1996).

After reviewing the information submitted by Ferbasa in its

original and supplemental COP responses, we have determined that (1)

the transfer prices from the affiliated supplier used by Ferbasa in its

calculation of reported materials costs for eucalyptus charcoal were

below the supplier's cost of producing that major input, and (2) the

transfer prices from the affiliated supplier for iron ore were not

representative of market prices for that product. Consequently, we have

recalculated Ferbasa's reported material costs for eucalyptus charcoal

and iron ore.

Ferbasa stated that its prior submissions to the Department contain

information sufficient for the Department to recalculate the reported

material costs for these inputs, if necessary. We note, however, that

although Ferbasa did provide certain data, it did not provide all the

necessary information for such a recalculation. With regard to

eucalyptus charcoal, Ferbasa provided monthly purchase prices and

quantities from unaffiliated suppliers and monthly purchase quantities

and COPs for affiliated suppliers. Concerning iron ore, Ferbasa

provided monthly purchase prices and quantities from unaffiliated

suppliers and monthly purchase quantities from affiliated suppliers.

However, Ferbasa did not provide monthly inventory quantities and

values for either input. Since we are not calculating materials costs

using a replacement cost methodology, we would need the inventory

quantities and values in order to properly recalculate the cost of

these materials consumed in the production of ferrosilicon during the

six-month period of September 1994 through February 1995. Thus, we are

not able to calculate the actual cost of these two materials used in

production during this six-month period. Therefore, we have used the

facts otherwise available to determine the costs for eucalyptus

charcoal and iron ore used in the production of the subject

merchandise.

As the facts available, we have adjusted Ferbasa's eucalyptus

charcoal costs by the monthly ratio of the affiliate's cost of

producing this input to the weighted-average purchase price Ferbasa

paid to affiliated and unaffiliated suppliers for the input as reported

by Ferbasa in Appendix D-5 of its COP response. Similarly, we have

adjusted Ferbasa's iron ore costs by the monthly ratio of average

monthly purchase price charged by Ferbasa's unaffiliated supplier to

the weighted-average purchase price Ferbasa paid to affiliated and

unaffiliated suppliers for the input as reported by Ferbasa in Appendix

D-15 of its supplemental COP response.

Comment 9: The petitioners contend that in calculating the selling,

general and administrative (SG&A) expenses included in COP, the

Department used Ferbasa's interim, unaudited and unconsolidated

financial statement which covers only the first two months of 1995.

In addition, in determining interest expenses, petitioners contend

that the Department divided the sum of Ferbasa's reported net financing

expenses for the six-month period for which Ferbasa reported sales and

cost data by the sum of the monthly cost of sales for that period.

Thus, petitioners argue, by failing to calculate these ratios based on

annual numbers, the Department has acted contrary to its established

practice. Citing Silicon Metal from Brazil, LTFV, at 26,985,

petitioners state that ``G&A expenses are period costs which should be

based on the annual period in which they were incurred,'' and claim the

same is true for interest expenses. Moreover, according to petitioners,

in calculating these ratios, Department practice requires use of a

consolidated, audited financial statement for the fiscal year that most

closely correlates to the POR. Petitioners conclude, therefore, that

the Department should calculate the SG&A and interest expense ratios

based on Ferbasa's 1994 audited financial statement since that period

most closely approximates the six-month period for which Ferbasa

provided sales and cost data.

Furthermore, petitioners emphasize that the Department should use

the constant currency figures from the financial statement, which have

been adjusted to eliminate the distortive

[[Page 59412]]

effects of hyperinflation experienced by Brazil during the first half

of 1994.

Ferbasa argues that there are two basic flaws in petitioners'

proposition that the Department should use the constant currency

figures from the 1994 fiscal year (FY) audited financial statement.

First, Ferbasa claims that the figures on the audited statement are the

expenses of the consolidated company (Ferbasa and its subsidiaries) and

second, the selling expense line item includes expenses such as freight

charges and commissions for outside parties that are not related to the

selling expenses incurred by Ferbasa.

Additionally, Ferbasa contends that in its COP calculations, the

Department incorrectly used a two-month SG&A cost ratio provided in

Ferbasa's September 21, 1995 questionnaire response. According to

Ferbasa, for the final results of review, the Department should use the

six-month (September 1994-February 1995) weighted-average SG&A ratio

reported in the COP response. This would be consistent with the

Department's use of six-month weighted-average COMs and financing

expenses and the Department's determination that Brazil was not a

hyperinflationary economy during this period.

Department's Position: We agree with petitioners that Department

should use the annual consolidated income statement adjusted for

inflation to determine the interest expense ratio. However, it is the

Department's practice to base G&A expenses on the unconsolidated

financial statement of the company. In this case, we have relied on the

1994 fiscal year unconsolidated audited financial statement to

calculate G&A expenses, and the consolidated statement to determine the

interest expense ratio. The Department's practice is to use the

consolidated income statement for finance expenses because debt is

fungible and corporations can shift debt and its related expenses

toward or away from subsidiaries in order to manage profit. See Silicon

Metal from Brazil: Final Results of Antidumping Duty Administrative

Reviews, 59 FR 42,806 42,807 (August 19, 1994).

Since the value of the Brazilian currency changed significantly for

the first half of 1994, costs which were incurred at the end of the

year are not comparable to costs incurred at the beginning of the year.

Without the application of indexing, the calculation of general

expenses for periods of such significant inflation does not produce a

meaningful result. To calculate a meaningful general expense amount, it

is necessary to restate each month's general expenses in equivalent

terms, that is, the currency value at a given point in time, such as

the end of the year. This procedure has already been accomplished and

reported in the constant currency column in Ferbasa's income statement.

As explained in Doing Business in Brazil (Price Waterhouse, 1994),

constant currency amounts have been adjusted to price levels current at

the balance sheet date. The constant currency column in the financial

statement, which reflects an adjustment for the potentially distortive

effects of inflation, offers a more accurate measure of Ferbasa's

production costs. In an inflationary environment such as Brazil's

during a portion of the POR, money loses its purchasing power at such a

rate that unadjusted comparisons of transactions that have occurred at

different times during the accounting year are misleading. As further

described in Doing Business in Brazil, the constant currency financial

statement is ``used by corporate management to monitor and compare

results of operations and by financial analysts to evaluate the

performance of listed corporations.'' Any financial statement which

corrects for potential distortions, such as those caused by inflation,

are preferable to financial statements which include such distortions.

Further, due to the periodic nature of such costs, we have followed

the Department's established practice of calculating G&A and interest

expenses using the annual audited income statement for the fiscal year

covering the greatest part of the POR. See Final Determination of Sales

at Less Than Fair Value: Oil Country Tubular Goods from Argentina, 60

FR 33,539, 33,549 (June 28, 1995) and Final Determination of Sales at

Less Than Fair Value: Hot-Rolled Carbon Steel Flat Products, Cold-

Rolled Carbons Steel Flat Products, Corrosion-Resistant Carbon Steel

Flat Products, and Cut-to-Length Carbon Steel Plate from Canada, 58 FR

37105, 37133 (July 9, 1993). To calculate G&A and interest expenses for

purposes of COP and CV in these final results, we have therefore used

the constant currency values from the 1994 audited financial statement

covering the greatest part of the period for which we are using price

and other cost data.

With regard to the calculation of selling expenses for purposes of

CV, in accordance with established Department practice, we have used

the sale-specific selling expenses reported by Ferbasa in its response

to the Department's sales questionnaire. See, Policy Bulletin 94.6,

Treatment of adjustments and selling expenses in calculating the cost

of production (COP) and (CV).

Comment 10: The petitioners asset that in determining the net

interest expenses to be included in COP and CV, it is the Department's

established practice to reduce the amount of total interest expenses

only by interest income from short-term investments derived from

working capital. The petitioners further assert that if a respondent

fails to demonstrate that its claimed offset is related solely to

short-term income, the Department's practice is to disallow the claimed

offset.

Petitioners allege that for this review, Ferbasa failed to

demonstrate that its claimed offset was related to short-term interest

income. Despite Ferbasa's acknowledgement that two of the six items

that comprise its interest income category on the financial statement

do not qualify as short-term interest income for purposes of dumping

calculations, petitioners argue that Ferbasa failed to make an

affirmative demonstration that the remaining four categories do relate

solely to short-term interest income.

Thus, the petitioners conclude that the Department should not allow

any offset for short-term interest income to the total interest

expenses recorded in Ferbasa's financial statement.

Ferbasa opposes the petitioners' recommendation that the Department

deny an offset adjustment to claimed interest expenses. In responding

to petitioners' argument that it failed to adequately demonstrate that

short-term nature of the four categories of interest income for which

it claims an adjustment, Ferbasa claims that the four categories of

income are related to interest income received from (1) savings or

checking accounts, (2) late payments of customer accounts receivables,

(3) short-term investment transactions, and (4) monetary correction of

gains on receivables. Ferbasa emphasized that these four categories are

all of a short-term nature. Accordingly, Ferbasa argues, the Department

should continue to grant this adjustment for the final results of

review.

Department's Position: The Department generally considers Ferbasa's

response with regard to its calculation of interest expense to be in

compliance with the statute and with the Department's questionnaire. In

its March 27, 1996 supplemental COP response, Ferbasa provided a

worksheet demonstrating its calculation of net interest expenses,

specifically noting which categories of interest income are not derived

from short-term investments and were therefore excluded from its

calculation of net interest expenses.

[[Page 59413]]

There is no information on the record that would support petitioners'

claim that Ferbasa overstated its short-term interest income and

consequently understated its interest expense. However, in preparing

its reported net interest expenses, Ferbasa used the historical cost

figures from the consolidated 1994 fiscal year audited financial

statement. As discussed in the Department's Position with regard to

Comment 9 above, it is the Department's practice, when calculating

general costs on an annual basis for an economy that experienced

hyperinflation during that annual period, to rely on values reported on

a constant currency basis. Therefore, it was necessary to recalculate

Ferbasa's net interest expenses for these final results of review.

Because Ferbasa's worksheet did not provide detail concerning short-

term vs. long-term interest income based on the constant currency

values recorded in its audited financial statements, the Department

relied on the facts otherwise available to calculate a net interest

expense ratio. As the facts otherwise available the Department (1)

determined the ratio of short-term income to total interest income as

provided based on the historical cost figures, and (2) applied this

ratio to the total interest income value recorded in the constant

currency portion of the financial statement to determine the short-term

interest income offset to total interest expenses.

Comment 11: The petitioners argue that the Department erred in its

calculation of COP by relying on Ferbasa's reported allocation of

indirect expenses (consisting of fixed and variable factory overhead)

over installed capacity. Petitioners contend that installed capacity is

not an appropriate basis for allocating indirect expenses because it is

a theoretical parameter that does not reflect the actual operations of

a company.

The petitioners contend that Ferbasa reported final numbers already

allocated to the production of ferrosilicon but failed to provide a

worksheet that would explain how those expenses were allocated. In

addition, petitioners suggest that information provided by Ferbasa on

the record does not contain sufficient detail to allow the Department

to properly allocate these expenses. Therefore, the petitioners

conclude that the Department should resort to the facts otherwise

available and determine an amount for indirect expenses by multiplying

the sum of Ferbasa's reported monthly materials, labor, energy, and

utility costs by the variable and fixed overhead ratio provided in the

petitioners' sales-below-cost allegation.

Ferbasa contests petitioners' allegations that it did not properly

report and allocate its indirect (variable and fixed factory overhead)

expenses. Ferbasa claims that it provided itemized costs in its

supplemental COP response and that those costs were incurred by the

indirect cost centers related to the production of ferrosilicon.

Finally, Ferbasa states that it has reported these costs in the same

manner as they are allocated in its accounting system (i.e., on the

basis of installed capacity) and in accordance with the provisions set

forth in section 773(f)(1)(A) of the antidumping statute. In

conclusion, Ferbasa argues that the Department should accept its

reported allocation of these expenses for the final results of review.

Department's Position: The Department considers Ferbasa's response

with regard to the calculation of fixed and variable factory overhead

to be in accordance with the Department's questionnaire and the

statute. Ferbasa reported these costs in the same manner in which it

records them in its financial statement, which it maintains in

accordance with Brazilian GAAP. As stated in the Department's Position

to Comment 2, it is the Department's established practice to accept

costs taken directly from a respondent's accounting system when that

system is in accordance with the foreign country's GAAP and it is clear

that the figures reported do not distort the dumping calculations. In

its March 1, 1996, COP questionnaire response Ferbasa states that the

per unit monthly variable and fixed overhead costs were calculated by

dividing the total monthly costs by the total monthly quantity

produced. Ferbasa further states that the production of ferrosilicon is

a continuous process and that the company had no idle assets and

incurred no expenses for idle equipment, closures or shutdowns during

the POR. See pp. D-20, 25, and 34.

We agree with the petitioners that the Department does not normally

accept installed capacity as an allocation factor for costs because it

does not necessarily reflect the actual operations of the company.

However, based on the information provided by Ferbasa, as discussed

above, in this instance installed capacity does in fact reflect the

operations of the company during this period. Therefore we have

determined that Ferbasa's methodology is an acceptable allocation basis

for these costs during this period.

Comment 12: Petitioners contend that in calculating CV the

Department must include an amount for ICMS and IPI taxes incurred on

material inputs since the statute requires the inclusion of taxes that

are not remitted or refunded upon exportation. See, section 773(e) of

the Act.

The petitioners further contend that although the Department

instructed Ferbasa to report the net per-unit amounts Ferbasa paid for

all internal taxes imposed on purchases of direct materials used to

produce ferrosilicon during the POR, Ferbasa only reported ranges of

tax rates for ICMS and IPI taxes. Petitioners also argue that in

calculating the monthly per-unit amounts incurred for ICMS and IPI

taxes, Ferbasa inappropriately based its calculation on the total value

of all raw materials purchased rather than on the value of raw

materials consumed in the production of ferrosilicon during the POR.

Petitioners conclude that this resulted in Ferbasa's reporting tax

amounts that do not correspond to the cost of materials consumed.

Because Ferbasa failed to report the amount of taxes for material

consumed, the petitioners urge the Department to resort to the facts

otherwise available in the calculation of CV and apply the highest ICMS

and IPI tax rates reported by Ferbasa of 17 and 15 percent,

respectively.

Ferbasa argues that petitioners' contentions on this issue are

without merit since the URAA explicitly amended the antidumping law to

remove consumption taxes from NV and eliminate the addition of taxes to

U.S. price in order to ensure that no consumption tax is included in

either market's price (i.e., to achieve tax neutrality). Specifically,

section 773(a)(6)(B) of the Act requires the Department to reduce NV by

the amount of indirect taxes imposed on the foreign product or

components thereof that have been rebated or not collected, to the

extent that such taxes are added to or are in the price of the foreign

like product. Ferbasa argues, as such, where CV is used as NV, the

Department should not include consumption taxes in the NV.

Ferbasa also responds to petitioners' claim that Ferbasa's

reporting methodology for calculating taxes is flawed and should be

rejected. Ferbasa contends that it calculated the tax rates based on

monthly purchases and then applied that rate to the value of monthly

consumption in order to derive the reported monthly taxes associated

with the production of ferrosilicon during the POR.

Department's Position: We agree with Ferbasa that it reported ICMS

and IPI taxes in a manner that is in accordance with Department

practice.

[[Page 59414]]

Further, we have determined that the ICMS and IPI taxes must be

added to the CV of the product under review. Section 773(e) of the Act

requires the deduction from CV of any internal taxes applicable

directly to material inputs or their disposition which are remitted or

refunded upon exportation of the subject merchandise. The ICMS and IPI

taxes were paid on material inputs for the production of ferrosilicon

by Ferbasa. In so far as Brazil does not rebate upon export the ICMS

and IPI taxes paid on the inputs used in the production of finished

ferrosilicon, the cost of those exports entering the United States must

include the value-added taxes (VAT) which were paid on the inputs,

regardless of when or how taxes are recovered on home market sales. It

is important to note that indirect taxes such as those at issue here

are properly viewed as being imposed upon and ``borne by'' the product,

not the producer. Thus, the fact that a producer may recover the total

taxes it paid by virtue of unrelated home market transactions is

irrelevant to the question of whether the exported product continues to

bear the tax burden. Therefore, the tax amounts must be added to CV to

properly reflect the true costs and expenses borne by this product. See

Final Results of Antidumping Duty Administrative Reviews: Silicon Metal

Brazil, 61 FR 46763 (September 5, 1996).

Comment 13: Petitioners state that Ferbasa pays ICMS taxes on its

purchases of electricity and that for purposes of calculating CV, such

taxes should be included in the reported electricity costs. Petitioners

argue that since Ferbasa failed to report these taxes in its

submissions, the Department should apply the highest ICMS tax rate

(i.e., 17 percent) as the facts otherwise available to calculate an

amount of taxes incurred on electricity and incorporate this amount in

the calculation of CV.

Department's Position: We agree with petitioners that ICMS taxes

paid on electricity for the production of ferrosilicon must also be

included in the CV of this product. See the Department's Position on

Comment 12 above. Because Ferbasa did not provide any information with

regard to its payment of taxes on electricity for the production of

ferrosilicon, we have determined to use the facts available to fill

this gap. Ferbasa reported that during the POR it paid ICMS taxes of up

to 17 percent on material inputs. However, since Ferbasa did not

provide specific data with regard to ICMS taxes paid on electricity, we

have used publicly available data to fill the gap. Specifically, we

used information contained in Price Waterhouse's publication Doing

Business in Brazil, July 1994, which shows that the intrastate ICMS

rate applied to electricity was 18 percent. Therefore as the facts

otherwise available, we have applied the 18 percent intrastate ICMS tax

rate to the electricity costs reported by Ferbasa and included these

figures in our calculation of CV.

Comment 14: Petitioners argue that in its calculations for the

preliminary results, the Department used an incorrect exchange rate for

converting amounts reported in Reais to U.S. dollars.

Department's Position: We agree with petitioners. The Department

inadvertently used an inverted exchange rate for converting amounts

reported in Reais to U.S. dollars. We have corrected this mistake for

the final results of review.

Comment 15: Ferbasa contends that the Department incorrectly used

the monthly interest rate reported in Ferbasa's September 21, 1995

submission for the calculation of Ferbasa's imputed home market credit

expense. Ferbasa contends that the Department should have used the

monthly interest rates reported in Ferbasa's December 1, 1995

supplemental sales response which reflect Ferbasa's actual short-term

borrowings during the POR.

Department's Position: We disagree in part with Ferbasa. Although

Ferbasa did provide revised monthly interest rates based on its actual

short-term borrowings, we note that these rates were not calculated in

accordance with accepted Department methodology. Ferbasa calculated the

reported rate as a ratio of total monthly interest payments to the

number of ``business days,'' rather than total days in a given month.

Since this ratio is applied to a calculation formula that accounts for

all days in the month, the result would be an overstated home market

imputed credit expense.

Therefore, we have continued to use the monthly short-term interest

rates provided by Ferbasa in its original questionnaire response, as

published in the Dinheiro Vivo.

Comment 16: According to Ferbasa, the Department incorrectly

recalculated Ferbasa's U.S. credit expense by using a home market

interest rate. In addition, Ferbasa alleges that the Department

incorrectly reclassified as ``bank fees'' its actual U.S. credit

expense and adjusted NV for this amount. To correct these errors,

Ferbasa contends that the Department should adjust NV only for the

amount of its actual U.S. credit expenses which Ferbasa calculated

based on (1) total U.S. sales prices, (2) its rate of U.S. dollar

denominated short-term borrowings, and (3) the period of time between

date of shipment and date of receipt of payment by the U.S. customer.

Ferbasa argues that use of its reported actual short-term U.S. credit

expense would be consistent with longstanding Department practice.

Department's Position: We agree with Ferbasa on both points. First,

we erroneously misclassified Ferbasa's reported U.S. credit expenses as

bank fees and thus double-counted U.S. credit expenses in our

calculation of NV. We have corrected this for these final results.

Second, we also agree that we incorrectly recalculated Ferbasa's U.S.

credit expenses by using a home market interest rate for borrowings in

Reais.

As the Department stated in the Final Determination of Sales at

Less than Fair Value: Fresh Cut Roses from Colombia, 60 FR 6980, 6998

(February 6, 1995), ``in determining the U.S. interest rate, it is the

Department's policy that the interest rate used for a particular credit

calculation should match the currency in which the sales are

denominated.''

After reviewing the information submitted on the record, we have

determined that Ferbasa correctly reported its U.S. imputed credit

expenses in its original submission, by using its actual cost of short-

term borrowing in U.S. dollars during the period. Therefore, for these

final results, we have used Ferbasa's reported U.S. credit expenses for

input credit costs incurred for U.S. sales.

Comment 17: According to Ferbasa, the URAA explicitly amended the

antidumping law to remove consumption taxes from the home market price

and eliminate the addition of taxes to U.S. price, in order to ensure

that no consumption tax is included in the price in either market

(i.e., to achieve tax neutrality). Specifically, section 773(a)(6)(B)

of the Act requires the Department to reduce NV by the amount of

indirect taxes imposed on the foreign product or components thereof

that have been rebated or not collected, to the extent that such taxes

are added to or are included in the price of the foreign like product.

Despite the statutory requirement, Ferbasa argues that for the

preliminary results of review, the Department failed to deduct from the

home market selling price the IPI tax included in the home market gross

unit price. Ferbasa concludes that to correct this error for the final

results the Department should deduct the amount of the IPI tax

(reported in the field ITAX) from the gross unit price in its

calculation of NV.

[[Page 59415]]

The petitioners argue that the adjustment for taxes referenced by

Ferbasa is relevant only in price-to-price comparisons. In so far as

Department practice will require significant changes in the margin

calculations which will result in a price to CV comparison, the

petitioners contend that the issue is moot and need not be considered

by the Department.

Department's Position: We agree with petitioners that as a result

of corrections and changes to our calculation of COP, our margin

calculations have been based on a price to CV comparison. Therefore,

the issue of deducting IPI taxes from home market prices need not be

addressed in this notice.

Comment 18: Ferbasa argues that the Department, in its calculation

of NV, failed to offset the U.S. commissions by an amount of home

market indirect selling expenses and inventory carrying costs even

though no commissions were paid for home market sales of ferrosilicon,

but a commission was paid for the U.S. sale. Citing Sec. 353.56(c) of

the Department's regulations, Ferbasa contends that where a commission

is paid in one market and not in the other market, the commission

should be offset by the sum of the indirect selling expenses and

inventory carrying costs incurred in the other market up to the lesser

of the commission or the selling expenses/inventory carrying costs.

Finally, Ferbasa argues that the Department should correct this

oversight for the final results of review by applying its indirect

selling expense ratio against gross unit prices less the IPI tax.

Petitioners argue that Ferbasa's contentions regarding the

commission offset are incorrect. Petitioners suggest that since Ferbasa

stated that its reported indirect selling expenses reconcile to its

financial statements and its financial accounting system does not

reflect any taxes, home market indirect selling expenses should be

calculated using gross unit price reduce by all taxes.

Department's Position: We agree with Ferbasa that in the

preliminary results margin calculations the Department inadvertently

did not make an offsetting adjustment to NV for the commission incurred

on the U.S. sale of ferrosilicon. We have corrected this oversight for

these final results of review. However, we also agree with petitioners

that it appears that Ferbasa calculated its indirect selling expense

and inventory carrying cost ratios against a sales value that was

exclusive of both IPI and ICMS taxes. Therefore, we have calculated

this adjustment by applying the combined indirect selling and inventory

carrying cost ratios to home market prices that are net of both of

these taxes.

Final Results of Review

As a result of our analysis of the comments received, we determined

that the following margins exist for the period August 16, 1993 through

February 28, 1995:

------------------------------------------------------------------------

Margin

Manufacturer/producer/exporter (percent)

------------------------------------------------------------------------

Companhia de Ferro Ligas da Bahia............................ 00.05

------------------------------------------------------------------------

The Department shall determine, and the U.S. Customs Service shall

assess, antidumping duties on all appropriate entries. Individual

differences between U.S. price and NV may vary from the percentages

stated above. The Department will issue appraisement instructions

directly to the U.S. Customs Service.

Furthermore, the following deposit requirement will be effective

for all shipments of subject merchandise from Brazil entered, or

withdrawn from warehouse, for consumption on or after the publication

date of the final results of this administrative review, as provided by

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

reviewed company will be zero; (2) for merchandise exported by

manufacturers or exporters not covered in this review but covered in

previous reviews or the original less-than-fair-value (LTFV)

investigation, the cash deposit rate will continue to be the rate

published in the most recent final results or determination for which

the manufacturer or exporter received a company-specific rate; (3) if

the exporter is not a firm covered in this review, an earlier review,

or the LTFV investigation, but the manufacturer is, the cash deposit

rate will be that established for the manufacturer of the merchandise

in the final results of this review, earlier review or the LTFV

investigation, whichever is the most recent; and, (4) the cash deposit

rate for all other manufacturers or exporters will be 35.95 percent,

the ``all others'' rate established in the antidumping duty order (59

FR 11769, March 14, 1994).

These cash deposit requirements, when imposed, shall remain in

effect until publication of the final results of the next

administrative review.

This notice also 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 the only 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

return/destruction of APO materials or conversion to judicial

protective order is hereby requested. Failure to comply with the

regulations and terms of the 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 19 CFR 353.22.

Dated: November 4, 1996.

Robert S. LaRussa,

Acting Assistant Secretary for Import Administration.

[FR Doc. 96-29936 Filed 11-21-96; 8:45 am]

BILLING CODE 3510-DS-M