59 FR 55443

                                            NOTICES

                                    DEPARTMENT OF COMMERCE

                                           [C-351-029]

              Certain Castor Oil Products From Brazil: Preliminary Results of Countervailing
                                  Duty Administrative Review

                                     Monday, November 7, 1994

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

EFFECTIVE DATE: November 7, 1994.

FOR FURTHER INFORMATION CONTACT: Raphiel Hampton or Vincent Kane, Office of Countervailing Investigations, U.S.
Department of Commerce, Room B099, 14th Street and Constitution Avenue, N.W., Washington, DC 20230; telephone (202) 482-0176 or 482-2815, respectively.

Preliminary Results

The Department of Commerce is conducting an administrative review of the countervailing duty order of certain
castor oil products from Brazil. We preliminarily determine the net subsidy to be 0.03 percent ad valorem, which is de
minimis, for the period January 1, 1992, through December 31, 1992. We invite interested parties to comment on these
preliminary results.

Background 

Since the publication of the notice of initiation in the Federal Register (58 FR 26960, May 6, 1993), the following events
have occurred.

On October 13, 1993, we issued a questionnaire to the Brazilian Embassy in Washington, D.C., concerning the subsidy
programs under review. We received a response from the Government of Brazil (GOB) on December 29, 1993, on
behalf of itself and the respondent's companies. After reviewing the GOB's response, we issued a supplemental
questionnaire to the GOB on January 28, 1994. We received a supplemental response from the GOB on February 23, 1994.
From March 7 to 18, 1994, we verified the government and companies' responses in Brazil.

Scope of Review 

The merchandise subject to this review is hydrogenated castor oil and 12- hydroxystearic acid. Imports of these products
are currently classifiable under the following Harmonized Tariff Schedule ("HTS") subheadings: 1516.20.90 and 1519.19.40.
Although the HTS subheadings are provided for convenience and customs purposes, our written description of the scope of
this proceeding is dispositive.

The review covers six companies, the period January 1 through December 31, 1992, and 12 programs: (1) Preferential
Export Financing under Resolution 950/1009; (2) Income Tax Exemption for Export Earnings; (3) Preferential Export
Financing Under CIC-OPCRE 6-2-6; (4) Preferential Financing for Industrial Enterprises by the Bank of Brazil; (5)
Reduction of Industrial Products Tax (IPI) and Import Duties Under Decreto No. 77.065 through BEFIEX; (6) Preferential
Financing for National Trading Companies under Resolution 883 of the Banco Central do Brasil; (7) Accelerated
Depreciation for Brazilian-Made Capital Goods; (8) Preferential Financing under Resolution 68 through FINEX; (9)
Preferential Financing under Resolution 578/83 through FUNPAR; (10) Preferential Financing under Resolution 579/83
through PROEX and PROSIM; (11) Preferential Financing for the Storage of Merchandise Destined for Export under Resolution 330/Portaria 130 of the Banco
Central do Brasil; and (12) Green Yellow Drawback (Portaria 68/83).

Calculation Methodology for Assessment and Cash Deposit Purposes 

In calculating the benefits received during the review period, we followed the methodology described in 19 CFR
355.20(d)(1) (53 FR 52325, December 27, 1988). Using this methodology we calculated a country-wide rate of 0.03
percent which is de minimis.

Analysis of Program 

(1) Income Tax Exemption for Export Earnings

Under this program, exporters of the subject merchandise were eligible for an exemption from income tax on the portion
of their profits attributable to exports. On April 12, 1990, Decree Law 8,034 eliminated this exemption by establishing a 30
percent income tax rate for export profits, which equaled the normal corporate income tax rate. Boley, however, was
authorized to use the income tax exemption on export earnings under the terms of a contract with the Commission for the Granting of Fiscal Benefits to Special Export Programs (BEFIEX) until its contract expired. Therefore,
despite the fact that the income tax exemption for export earnings was eliminated, Boley received residual benefits from
the program during the review period. No other company under review used this program.

To calculate the income tax savings realized by Boley during the review period, we multiplied the income tax deduction
taken by the firm under this program by 30 percent, the corporate income tax rate during the review period. We then used
the amount of Boley's income tax savings to calculate a country- wide rate. We calculated the country-wide rate by
dividing the total income tax savings realized by Boley by the total exports of all products by all of the companies under
review. On this basis, we calculated a subsidy rate of 0.03 percent ad valorem, which is de minimis.

Programs Preliminarily Found To Be Terminated 

We examined the following programs and preliminarily determine these programs to be terminated. Further, we verified
that the respondents did not receive any residual benefits under them during the period of review.

a. Preferential Export Financing Under Resolution 950/1009 Through CACEX (Carteira de Comercio Exterior) of the Bank of Brazil

We verified that this program was terminated on August 30, 1990, by Banco Central Bank do Brasil Resolution No. 1,744.
See, also, Final Affirmative Countervailing Duty Determination: Silicon Metal from Brazil, June 12, 1991 (56 FR
26988).

b. Preferential Export Financing Under CIC-OPCRE 6-2-6

We verified that on May 10, 1990, the functions of CACEX of the Bank of Brazil, which administered these export
financing loans, were absorbed by the Secretariat of Foreign Trade (SECEX). SECEX was not empowered to perform banking
operations and the export financing was discontinued. See, also, Certain Round-Shaped Agricultural Tillage Tools
from Brazil; Preliminary Results of Countervailing Duty Administrative Review, March 31, 1992 (57 FR 10885) 
  (Tillage Tools).

c. Reduction of Industrial Products Tax (IPI) and Import Duties Under Decreto No. 77.065 Through BEFIEX (Comissao par
a Concessao de Beneficios a Programas Especials de Exportacao) and CIEX (Comissao para Incentivos a Exportacao)

We verified that on April 12, 1990, Decree Law 8,032 limited this program exclusively to imports made by the federal,
state, and municipal governments, territories, and other political entities, and scientific institutions, thereby eliminating
the benefit to commerical enterprises. See, also, Tillage Tools.

d. Preferential Financing for National Trading Companies Under Resolution 883 of the Banco Central do Brasil

We verified that Banco Central do Brasil Resolution 1,744 revoked 

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Resolution 883 on August 30, 1990, thereby terminating this program. See, also, Tillage Tools.

e. Preferential Financing Under Resolution 68 Through FINEX

We verified that this program was terminated on April 5, 1988, by Article 4 of Brazil's new constitution, which
provided that all programs requiring funding from the national treasury had to be reenacted within a two-year period or
cease to exist. Legislation to reenact preferential financing through FINEX was not passed and the program ceased to exist.

f. Preferential Financing Under Resolution 579/83 Through PROEX and PROSIM

We verified that preferential financing through PROSIM was terminated on February 4, 1985, by BNDES Resolution 607,
and that preferential financing through PROEX was terminated in 1991 by BNDES Resolution 762.

g. Preferential Financing for the Storage of Merchandise Destined for Export Under Resolution 330/Portaria 130 of the
Banco Central do Brasil

We verified that this program was terminated on August 21, 1984, by Central Bank Resolution 950.

Programs Preliminarily Found To Be Not Used 

We also examined the following programs and preliminarily determine that the respondents did not use them during the
review period:

a. Preferential Financing for Industrial Enterprises by the Bank of Brazil

b. Preferential Financing Under Resolution 578/83 Through FUNPAR

c. Accelerated Depreciation for Brazilian Made Capital Goods

d. Green Yellow Drawback (Portaria 68/83)


Preliminary Results of Review 

As a result of our review, we preliminarily determine the net subsidy to be 0.03 percent, which is de minimis, for the
period January 1, 1992 through December 31, 1992.

If the final results of this review remain the same as these preliminary results, the Department intends to instruct the
Customs Service not to assess countervailing duties on shipments of the subject merchandise from all companies,
exported on or after January 1, 1992 and on or before December 31, 1992. Further, as provided by section 751(a)(1) of the
Act, the Department will instruct Customs not to collect cash deposits on shipments of this merchandise from all
companies entered or withdrawn from warehouse for consumption on or after the date of publication of the final results of
this administrative review.

Parties to the proceeding may request disclosure of the calculation methodology and interested parties may request a
hearing not later than ten days after the date of publication of this notice. Interested parties may submit written arguments in case briefs on these preliminary results within 30 days of the date of publication. Rebuttal
briefs, limited to agruments raised in case briefs, may be submitted seven days after the time limit for filing the case brief.
Requests for a hearing should be made within ten days of the publication of these preliminary results. Any hearing, if
requested, will be held within seven days after the scheduled date for submission of rebuttal briefs. Copies of case briefs
and rebuttal briefs must be served on interested parties in accordance with 19 CFR 355.38(e) of the Department's
regulations. The Department will publish the final results of this administrative review, including the results of its analysis
of issues raised in any case or rebuttal brief.

This administrative review and notice are in accordance with section 751(a)(1) of the Act (19 U.S.C. 1675(a)(1)) and 19 CFR
355.22.

Dated: September 28, 1994. 

Susan G. Esserman,

Assistant Secretary for Import Administration.