[Federal Register Volume 73, Number 194 (Monday, October 6, 2008)]
[Notices]
[Pages 58121-58126]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E8-23565]


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DEPARTMENT OF COMMERCE

International Trade Administration

[C-533-844]


Certain Lined Paper Products From India: Notice of Preliminary 
Results of Countervailing Duty Administrative Review

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

SUMMARY: The Department of Commerce (the Department) is conducting an 
administrative review of the countervailing duty (CVD) order on certain 
lined paper products from India for the period February 15, 2006, 
through December 31, 2006, the period of review (POR).\1\ For 
information on the net subsidy rate for the reviewed company, Navneet 
Publications (India) Limited (Navneet), see the ``Preliminary Results 
of Review'' section of this notice. Interested parties are invited to 
comment on these preliminary results. See the ``Public Comment'' 
section of this notice.
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    \1\ Pursuant to 19 CFR 351.213(e)(2)(ii), because the Department 
received Navneet's request during the first anniversary month after 
publication of the order, this administrative review covers entries 
from February 15, 2006, the date of suspension of liquidation 
through December 31, 2006, the end of the most recently completed 
calendar year. (The date of suspension of liquidation corresponds to 
the publication in the Federal Register of the Notice of Preliminary 
Affirmative Countervailing Duty Determination and Preliminary 
Negative Critical Circumstances Determination: Certain Lined Paper 
Products from India, 71 FR 7916 (February 15, 2006) (Preliminary 
Determination of Lined Paper Investigation). However, for purposes 
of this administrative review, we will analyze data corresponding to 
calendar year 2006 (January 1, 2006, through December 31, 2006) to 
determine the subsidy rate for exports of subject merchandise made 
during the period in which liquidation of entries was suspended.

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DATES: Effective Date: October 6, 2008.

FOR FURTHER INFORMATION CONTACT: Jolanta Lawska or John Conniff, AD/CVD 
Operations, Office 3, Import Administration, International Trade 
Administration, U.S. Department of Commerce, Room 4014, 14th Street and 
Constitution Avenue, NW., Washington,

[[Page 58122]]

DC 20230; telephone: (202) 482-8362 or (202) 482-1009, respectively.

SUPPLEMENTARY INFORMATION:

Background

    On September 28, 2006, the Department published in the Federal 
Register the CVD order on certain lined paper products from India. See 
Notice of Amended Final Determination of Sales at Less Than Fair Value: 
Certain Lined Paper Products from the People's Republic of China; 
Notice of Antidumping Duty Orders: Certain Lined Paper Products from 
India, Indonesia and the People's Republic of China; and Notice of 
Countervailing Duty Orders: Certain Lined Paper Products from India and 
Indonesia, 71 FR 56949 (September 28, 2006). On September 4, 2007, the 
Department published a notice of opportunity to request an 
administrative review of this CVD order. See Antidumping or 
Countervailing Duty Order, Finding, or Suspended Investigation; 
Opportunity to Request Administrative Review, 72 FR 50657 (September 4, 
2007) (Opportunity to Request Review).\2\ On September 21, 2007, we 
received a timely request for review from Navneet, an Indian producer 
and exporter of subject merchandise.
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    \2\ On October 1, 2007, we published a correction to the 
Opportunity to Request Review to correct the POR. See Antidumping or 
Countervailing Duty Order, Finding, or Suspended Investigation; 
Opportunity to Request Administrative Review, 72 FR 55741 (October 
1, 2007).
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    On October 31, 2007, the Department initiated an administrative 
review of the CVD order on certain lined paper products from India, 
covering the period February 15, 2006, through December 31, 2006. See 
Initiation of Antidumping and Countervailing Duty Administrative 
Reviews, 72 FR 61621 (October 31, 2007).\3\
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    \3\ In the notice of initiation published October 31, 2007, we 
listed the POR for certain lined paper products from India 
incorrectly. The correct POR is listed above.
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    The Department issued a questionnaire to the Government of India 
(GOI) and Navneet (collectively, the respondents) on November 6, 2007. 
We received a questionnaire response from Navneet on December 8, 2007, 
and from the GOI on December 13, 2007. Between March 31, 2008, and July 
9, 2008, we issued supplemental questionnaires to the respondents 
regarding programs addressed in the initial CVD questionnaire and 
received responses. Between April 8, 2008, and July 17, 2008 we 
received supplemental questionnaire responses from the GOI and Navneet.
    On January 17, 2008, petitioners \4\ submitted information on a new 
subsidy allegation. On April 30, 2008, the Department initiated an 
investigation of the new subsidy allegation. See the Memorandum to 
Melissa G. Skinner, Director, Office 3, from Jolanta Lawska, Case 
Analyst, entitled, ``New Subsidy Allegations for Navneet Publications 
(India), Ltd. (Navneet),'' a public document on file in the Central 
Records Unit (CRU), room 1117 of the main Department building. On May 
6, 2008, we issued a questionnaire on this new subsidy allegation to 
Navneet and the GOI. On May 19, 2008, and June 3, 2008, we received 
responses to the new subsidy questionnaires from the GOI and Navneet, 
respectively. On July 8, 2008, we issued a supplemental questionnaire 
to Navneet. On July 17, 2008, we received a Navneet's response.
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    \4\ Petitioners are the Association of American School Paper 
Suppliers and its members Mead Westvaco Corporation, Top Flight 
Inc., and Norcom Inc.
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    On May 16, 2008, the Department published in the Federal Register 
an extension of the deadline for the preliminary results of this review 
to no later than September 29, 2008. See Certain Lined Paper Products 
from India: Extension of Time Limit for Preliminary Results of 
Countervailing Duty Administrative Review, 73 FR 28431 (May 16, 2008).
    In accordance with 19 CFR 351.213(b), this review covers only those 
producers or exporters for which a review was specifically requested. 
The company subject to this review is Navneet. This review covers 15 
federal programs and 7 state programs.

Scope of Order

    The scope of this order includes certain lined paper products, 
typically school supplies, composed of or including paper that 
incorporates straight horizontal and/or vertical lines on ten or more 
paper sheets, including but not limited to such products as single- and 
multi-subject notebooks, composition books, wireless notebooks, 
looseleaf or glued filler paper, graph paper, and laboratory notebooks, 
and with the smaller dimension of the paper measuring 6 inches to 15 
inches (inclusive) and the larger dimension of the paper measuring 8\3/
4\ inches to 15 inches (inclusive). Page dimensions are measured size 
(not advertised, stated, or ``tear-out'' size), and are measured as 
they appear in the product (i.e., stitched and folded pages in a 
notebook are measured by the size of the page as it appears in the 
notebook page, not the size of the unfolded paper). However, for 
measurement purposes, pages with tapered or rounded edges shall be 
measured at their longest and widest points. Subject lined paper 
products may be loose, packaged or bound using any binding method 
(other than case bound through the inclusion of binders board, a spine 
strip, and cover wrap). Subject merchandise may or may not contain any 
combination of a front cover, a rear cover, and/or backing of any 
composition, regardless of the inclusion of images or graphics on the 
cover, backing, or paper. Subject merchandise is within the scope of 
the order whether or not the lined paper and/or cover are hole punched, 
drilled, perforated, and/or reinforced. Subject merchandise may contain 
accessory or informational items including but not limited to pockets, 
tabs, dividers, closure devices, index cards, stencils, protractors, 
writing implements, reference materials such as mathematical tables, or 
printed items such as sticker sheets or miniature calendars, if such 
items are physically incorporated, included with, or attached to the 
product, cover and/or backing thereto. Specifically excluded from the 
scope of this order are:
    <bullet> Unlined copy machine paper;
    <bullet> Writing pads with a backing (including but not limited to 
products commonly known as ``tablets,'' ``note pads,'' ``legal pads,'' 
and ``quadrille pads''), provided that they do not have a front cover 
(whether permanent or removable). This exclusion does not apply to such 
writing pads if they consist of hole-punched or drilled filler paper;
    <bullet> Three-ring or multiple-ring binders, or notebook 
organizers incorporating such a ring binder provided that they do not 
include subject paper;
    <bullet> Index cards;
    <bullet> Printed books and other books that are case bound through 
the inclusion of binders board, a spine strip, and cover wrap;
    <bullet> Newspapers;
    <bullet> Pictures and photographs;
    <bullet> Desk and wall calendars and organizers (including but not 
limited to such products generally known as ``office planners,'' ``time 
books,'' and ``appointment books'');
    <bullet> Telephone logs;
    <bullet> Address books;
    <bullet> Columnar pads & tablets, with or without covers, primarily 
suited for the recording of written numerical business data;
    <bullet> Lined business or office forms, including but not limited 
to: Preprinted business forms, lined invoice pads and paper, mailing 
and address labels, manifests, and shipping log books;

[[Page 58123]]

    <bullet> Lined continuous computer paper;
    <bullet> Boxed or packaged writing stationery (including but not 
limited to products commonly known as ``fine business paper,'' 
``parchment paper,'' and ``letterhead''), whether or not containing a 
lined header or decorative lines;
    <bullet> Stenographic pads (``steno pads''), Gregg ruled,\5\ 
measuring 6 inches by 9 inches;
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    \5\ ``Gregg ruling'' consists of a single- or double-margin 
vertical ruling line down the center of the page. For a six-inch by 
nine-inch stenographic pad, the ruling would be located 
approximately three inches from the left of the book.
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    Also excluded from the scope of this order are the following 
trademarked products:
    <bullet> Fly TM lined paper products: A notebook, notebook 
organizer, loose or glued note paper, with papers that are printed with 
infrared reflective inks and readable only by a Fly TM;
    <bullet> Pen-top computer. The product must bear the valid 
trademark Fly TM; \6\
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    \6\ Products found to be bearing an invalidly licensed or used 
trademark are not excluded from the scope.
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    <bullet> Zwipes TM: A notebook or notebook organizer made with a 
blended polyolefin writing surface as the cover and pocket surfaces of 
the notebook, suitable for writing using a specially-developed 
permanent marker and erase system (known as a Zwipes TM pen). This 
system allows the marker portion to mark the writing surface with a 
permanent ink. The eraser portion of the marker dispenses a solvent 
capable of solubilizing the permanent ink allowing the ink to be 
removed. The product must bear the valid trademark Zwipes TM.\7\
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    \7\ Products found to be bearing an invalidly licensed or used 
trademark are not excluded from the scope.
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    <bullet> FiveStar R Advance TM: A notebook or notebook organizer 
bound by a continuous spiral, or helical, wire and with plastic front 
and rear covers made of a blended polyolefin plastic material joined by 
300 denier polyester, coated on the backside with PVC (poly vinyl 
chloride) coating, and extending the entire length of the spiral or 
helical wire. The polyolefin plastic covers are of specific thickness; 
front cover is 0.019 inches (within normal manufacturing tolerances) 
and rear cover is 0.028 inches (within normal manufacturing 
tolerances). Integral with the stitching that attaches the polyester 
spine covering, is captured both ends of a 1'' wide elastic fabric 
band. This band is located 2\3/8\'' from the top of the front plastic 
cover and provides pen or pencil storage. Both ends of the spiral wire 
are cut and then bent backwards to overlap with the previous coil but 
specifically outside the coil diameter but inside the polyester 
covering. During construction, the polyester covering is sewn to the 
front and rear covers face to face (outside to outside) so that when 
the book is closed, the stitching is concealed from the outside. Both 
free ends (the ends not sewn to the cover and back) are stitched with a 
turned edge construction. The flexible polyester material forms a 
covering over the spiral wire to protect it and provide a comfortable 
grip on the product. The product must bear the valid trademarks 
FiveStar R Advance TM.\8\
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    \8\ Products found to be bearing an invalidly licensed or used 
trademark are not excluded from the scope.
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    <bullet> FiveStar Flex TM: A notebook, a notebook organizer, or 
binder with plastic polyolefin front and rear covers joined by a 300 
denier polyester spine cover extending the entire length of the spine 
and bound by a 3-ring plastic fixture. The polyolefin plastic covers 
are of a specific thickness; front cover is 0.019 inches (within normal 
manufacturing tolerances) and rear cover is 0.028 inches (within normal 
manufacturing tolerances). During construction, the polyester covering 
is sewn to the front cover face to face (outside to outside) so that 
when the book is closed, the stitching is concealed from the outside. 
During construction, the polyester cover is sewn to the back cover with 
the outside of the polyester spine cover to the inside back cover. Both 
free ends (the ends not sewn to the cover and back) are stitched with a 
turned edge construction. Each ring within the fixture is comprised of 
a flexible strap portion that snaps into a stationary post which forms 
a closed binding ring. The ring fixture is riveted with six metal 
rivets and sewn to the back plastic cover and is specifically 
positioned on the outside back cover. The product must bear the valid 
trademark FiveStar Flex TM.\9\
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    \9\ Products found to be bearing an invalidly licensed or used 
trademark are not excluded from the scope.
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    Merchandise subject to this order is typically imported under 
headings 4820.10.2050, 4810.22.5044, 4811.90.9090, 4820.10.2010, 
4820.10.2020, and 4820.10.4001 of the Harmonized Tariff Schedule of the 
United States (HTSUS). The HTSUS headings are provided for convenience 
and customs purposes; however, the written description of the scope of 
this order is dispositive.

Subsidies Valuation Information

I. Benchmarks for Loans and Discount Rates

    In these preliminary results, we require the use of rupee-
denominated long-term loans for purposes of our benchmark discount rate 
and long-term benchmark rate. Pursuant to 19 CFR 351.524(d)(3)(i), the 
Department will use, when available, the company-specific cost of long-
term, fixed-rate loans (excluding loans deemed to be countervailable 
subsidies) as a discount rate for allocating non-recurring benefits 
over time. Similarly, pursuant to 19 CFR 351.505(a), the Department 
will normally use the actual cost of comparable commercial borrowing by 
a company as a loan benchmark, when available. According to 19 CFR 
351.505(a)(2)(i), a comparable commercial loan is defined as one that, 
when compared to the loan being examined, has similarities in the 
structure of the loan (e.g., fixed interest rate vs. variable interest 
rate), the maturity of the loan (e.g., short-term vs. long-term), and 
the currency in which the loan is denominated.
    However, when there are no comparable commercial loans, the 
Department may use a national average interest rate as a benchmark 
discount rate and long-term benchmark rate, pursuant to 19 CFR 
351.524(d)(3)(i)(B) and 19 CFR 351.505(a)(3)(ii), respectively. In 
addition, 19 CFR 351.505(a)(2)(ii) states that the Department will not 
consider a loan provided by a government-owned special purpose bank for 
purposes of selecting a benchmark rate.
    Navneet reported rupee-denominated and dollar-denominated 
commercial short-term loans that were outstanding during the POR.\10\ 
However, Navneet did not report any comparable long-term loans from 
commercial banks during the years under consideration that the 
Department could use for our benchmark discount rate and long-term 
benchmark rate. Therefore, in accordance with 19 CFR 
351.524(d)(3)(i)(B) and 19 CFR 351.505(a)(3)(ii), we used India's prime 
lending rate (PLR) as published by the Reserve Bank of India (RBI), as 
our long-term benchmark interest rate. The use of the PLR is consistent 
with the Department's practice in prior Indian proceedings. See, e.g., 
Final Results of Countervailing Duty Administrative Review: Certain 
Hot-Rolled Carbon Steel Flat Products from India, 69 FR 26549

[[Page 58124]]

(May 13, 2004) (Final Results of First HRC Review), and accompanying 
Issues and Decision Memorandum (Final Results of First HRC Review 
Decision Memorandum) at I.B. ``Benchmarks for Loans and Discount 
Rate.''
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    \10\ In these preliminary results we are examining a 
countervailable program that requires the use of long-term 
benchmarks.
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II. Allocation Period

    Under 19 CFR 351.524(d)(2)(i), we presume the allocation period for 
non-recurring subsidies to be the average useful life (AUL) of 
renewable physical assets for the industry concerned, as listed in the 
Internal Revenue Service's 1977 Class Life Asset Depreciation Range 
System (IRS tables), as updated by the U.S. Department of the Treasury. 
This presumption will apply unless a party claims and establishes that 
the IRS tables do not reasonably reflect the AUL of the renewable 
physical assets for the company or industry under review, and the party 
can establish that the difference between the company-specific or 
country-wide AUL for the industry under review is significant, pursuant 
to 19 CFR 351.524(d)(2)(i). For assets used to manufacture products 
such as lined paper products, the IRS tables prescribe an AUL of 15 
years.
    In its questionnaire responses, Navneet did not rebut the 
regulatory presumption of a 15-year AUL. We, therefore, used a 15-year 
AUL to allocate any non-recurring subsidies for purposes of these 
preliminary results.
    Further, for non-recurring subsidies, we have applied the ``0.5 
percent test'' described in 19 CFR 351.524(b)(2). Under this test, we 
compare the amount of subsidies approved under a given program in a 
particular year to sales (total sales or total export sales, as 
appropriate) for the same year. If the amount of subsidies is less than 
0.5 percent of the relevant sales, then the benefits are allocated to 
the year of receipt rather than allocated over the AUL period.

Analysis Of Programs

I. Programs Preliminarily Determined To Be Countervailable

1. Duty Entitlement Passbook Scheme (DEPS)
    India's DEPS was enacted on April 1, 1997, as a successor program 
to the Passbook Scheme (PBS). DEPS enables exporting companies to earn 
import duty exemptions in the form of passbook credits rather than 
cash. All exporters are eligible to earn DEPS credits on a post-export 
basis, provided that the GOI has established a standard input/output 
norm (SION) for the exported product. DEPS credits can be used for any 
subsequent imports, regardless of whether they are consumed in the 
production of an export product. DEPS credits are valid for 12 months 
and are transferable after the foreign exchange is realized from the 
export sales on which the DEPS credits are earned. With respect to 
subject merchandise, the GOI has established a SION for the lined paper 
industry.
    The Department has previously determined that DEPS is a 
countervailable program. See, e.g., Notice of Final Affirmative 
Countervailing Duty Determination and Final Negative Critical 
Circumstances Determination: Certain Lined Paper Products from India, 
71 FR 45034 (August 8, 2006) (Final Determination of Lined Paper 
Investigation), and accompanying Issues and Decision Memorandum (Final 
Determination of Lined Paper Investigation Decision Memorandum) at IV. 
A.3. ``Duty Entitlement Passbook Scheme.'' Specifically, we determined 
that under DEPS, a financial contribution, as defined under section 
771(5)(D)(ii) of the Tariff Act of 1930, as amended (the Act), is 
provided because (1) the GOI provides credits for the future payment of 
import duties, and (2) the GOI does not have in place and does not 
apply a system that is reasonable and effective for determining what 
imports are consumed in the production of the exported product and in 
what amounts. Id. Therefore, under section 771(5)(E) of the Act and 19 
CFR 351.519(a)(4), we determined that the entire amount of import duty 
exemption earned during the POR constitutes a benefit. We also found 
DEPS to be specific under section 771(5A)(A) of the Act because the 
program is limited to exporters. See Final Determination of Lined Paper 
Investigation Decision Memorandum at IV.A.3. ``Duty Entitlement 
Passbook Scheme.'' No new information or evidence of changed 
circumstances has been presented in this review to warrant 
reconsideration of the Department's finding.
    We have previously determined that this program provides a 
recurring benefit under 19 CFR 351.519(c). See, e.g., Preliminary 
Determination of Lined Paper Investigation, 71 FR 7916, 7920 (unchanged 
in Final Determination of Lined Paper Investigation). See also 19 CFR 
351.524(c). In accordance with past practice and pursuant to 19 CFR 
351.519(b)(2), we preliminarily find that benefits from the DEPS 
program are conferred as of the date of exportation of the shipment for 
which the DEPS credits are earned. See, e.g., Final Affirmative 
Countervailing Duty Determination: Certain Cut-to-Length Carbon-Quality 
Steel Plate from India, 64 FR 73131 (December 29, 1999) (Final 
Determination of CTL Plate Investigation), at Comment 4 (explaining 
that for programs such as the DEPS, ``We calculate the benefit on an 
`earned' basis (that is upon export) where it is provided as a 
percentage of the value of the exported merchandise on a shipment-by-
shipment basis and the exact amount of the exemption is known'').
    To calculate the benefit, we summed the credits that Navneet earned 
during the POR on each export shipment to the United States during the 
POR. We then subtracted as an allowable offset the actual amount of 
application fees paid for each license in accordance with section 
771(6) of the Act.
    Because DEPS credits are earned on a shipment-by-shipment basis, in 
calculating the net subsidy rate under the DEPS program, we normally 
divide the DEPS credits, or benefits, earned on exports of subject 
merchandise to the United States during the POR by the total sales of 
subject merchandise to the United States during the POR. However, in 
the case of Navneet, the U.S. sales on which the company earned the 
DEPS credits during the POR pertained to both subject and non-subject 
merchandise. Therefore, in these preliminary results, we calculated the 
net subsidy rate by dividing the benefit by Navneet's total export 
sales to the United States during the POR. See, e.g., Final 
Determination of Lined Paper Investigation Decision Memorandum at 
IV.A.3. ``Duty Entitlement Passbook Scheme.''
    On this basis, we preliminarily calculate the net countervailable 
subsidy from the DEPS program to be 6.93 percent ad valorem.
2. Export Promotion Capital Goods Scheme (EPCGS)
    The EPCGS provides for a reduction or exemption of customs duties 
and an exemption from excise taxes on imports of capital goods. Under 
this program, producers may import capital equipment at a reduced 
customs duty, subject to an export obligation equal to eight times the 
duty saved to be fulfilled over a period of eight years (12 years where 
the CIF value is Rs. 100 Crore) \11\ from the date the license was 
issued. For failure to meet the export obligation, a company is subject 
to payment of all or part of the duty reduction, depending on the 
extent of the export shortfall, plus penalty interest.
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    \11\ A crore is equal to 10,000,000 rupees.
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    The Department has previously determined that the import duty 
reductions provided under the EPCGS constitute a countervailable export 
subsidy. See, e.g., Polyethylene

[[Page 58125]]

Terephthalate Film, Sheet, and Strip from India: Final Results of 
Countervailing Duty Administrative Review, 72 FR 6530 (February 12, 
2007) (Final Results of 3rd PET Film Review), and accompanying Issues 
and Decision Memorandum (Final Results of 3rd PET Film Review Decision 
Memorandum) at ``Export Promotion Capital Good Scheme.'' See also Final 
Determination of Lined Paper Investigation Decision Memorandum at 
IV.A.2. ``Export Promotion Capital Goods Scheme.''
    Specifically, the Department has found that under the EPCGS 
program, the GOI provides a financial contribution under section 
771(5)(D)(ii) of Act, in the form of revenue foregone that otherwise 
would be due. See, e.g., Final Determination of Lined Paper 
Investigation Decision Memorandum at IV.A.2. ``Export Promotion Capital 
Goods Scheme.'' The Department also found this program to be specific 
under section 771(5A)(A) of the Act because it is contingent upon 
export performance. We further found that the EPCGS conferred a benefit 
under section 771(5)(E) of the Act. Id. No new information or evidence 
of changed circumstances has been provided with respect to this 
program. Therefore, we continue to find that import duty reductions 
provided under the EPCGS are countervailable export subsidies.
    Navneet reported that it received import duty exemptions under the 
EPCGS program. For these preliminary results, we have determined the 
benefit for Navneet in accordance with our findings and treatment of 
this program in other Indian CVD proceedings. See, e.g., Final Results 
of 3rd PET Film Review Decision Memorandum at ``Export Promotion 
Capital Good Scheme;'' See also Final Determination of Lined Paper 
Investigation and Final Determination of Lined Paper Investigation 
Decision Memorandum at IV.A.2. ``Export Promotion Capital Goods 
Scheme.'' Under the Department's approach, there are two types of 
benefits under the EPCGS program. The first benefit is the amount of 
unpaid duties that would have to be paid to the GOI if the export 
requirements are not met. The repayment of this liability is contingent 
on subsequent events, and in such instances, it is the Department's 
practice to treat any balance on an unpaid liability as an interest-
free loan. See 19 CFR 351.505(d)(1).
    Further, consistent with our policy, absent acknowledgment in the 
form of an official letter from the GOI that the liability has been 
eliminated, we treat benefits from these licenses as contingent 
liabilities. See, e.g., Final Results of 3rd PET Film Review Decision 
Memorandum at ``Export Promotion Capital Goods Scheme;'' see also Final 
Determination of Lined Paper Investigation Decision Memorandum at 
IV.A.2. ``Export Promotion Capital Goods Scheme.''
    For those EPCGS licenses for which Navneet has not yet met the 
export obligations specified in the licenses by the end of the POR, we 
preliminarily find that the company had outstanding contingent 
liabilities during the POR. We further determine that the amount of the 
contingent liability will be treated as an interest-free loan in the 
amount of the import duty reduction or exemption.
    Accordingly, for those unpaid duties for which Navneet has yet to 
fulfill their export obligations, we preliminarily find the benefit to 
be the interest that Navneet would have paid during the POR had it 
borrowed the full amount of the duty reduction at the time of import. 
Pursuant to 19 CFR 351.505(d)(1), we used a long-term interest rate as 
our benchmark to calculate the benefit of a contingent liability 
interest-free loan because the event upon which repayment of the duties 
depends (i.e., the date of expiration of the time period for the 
company to fulfill its export commitments) occurs at a point in time 
more than one year after the date the capital goods were imported. 
Specifically, we used the long-term benchmark interest rates as 
described in the ``Subsidies Valuation'' section, supra. The rate used 
corresponds to the year in which Navneet imported the items under the 
program.
    The second benefit is the waiver of duty on imports of capital 
equipment covered by those EPCGS licenses for which the export 
requirement has been met. For certain licenses, Navneet reported that 
it had completed its export obligation under the EPCGS program, thereby 
eliminating the outstanding contingent liabilities on the corresponding 
duty exemptions. However, as explained above, in keeping with our 
practice, we have only accepted those claims that are accompanied by 
official letters from the GOI indicating that the company met its 
export obligation. Thus, for purposes of calculating the benefit, we 
treated licenses without accompanying letters from the GOI 
demonstrating satisfaction of the company's export obligations as 
contingent liabilities.
    For those licenses for which Navneet demonstrated that it had 
fulfilled the export obligations, we followed our methodology set forth 
in the Final Determination of Lined Paper Investigation and treated the 
import duty savings as grants received in the year in which the GOI 
waived the contingent liability on the import duty exemptions. See, 
e.g., Final Determination of Lined Paper Investigation Decision 
Memorandum. In accordance with 19 CFR 351.524(b)(2), for each of the 
grant amounts related to the particular license, we performed the ``0.5 
percent test'' to determine whether the benefit should be fully 
expensed in the year of receipt or allocated over the AUL used in this 
proceeding pursuant to the grant allocation methodology set forth in 19 
CFR 351.524(d)(1). In all cases, the grant amounts of the licenses 
exceeded 0.5 percent of Navneet's relevant sales. Therefore, we 
allocated the grant amounts over time using the methodology set forth 
under 19 CFR 351.524(d)(i).
    To calculate the subsidy rate for this program, we summed the 
benefits from the waived licenses, which we determined confer a benefit 
in the form of a grant, and from those licenses that have yet to be 
waived, which we determined confer a benefit in the form of contingent 
liability loans. We then divided the total benefits received by 
Navneet's total export sales for the POR. On this basis, we 
preliminarily determine the net countervailable subsidy from this 
program to be 1.35 percent ad valorem.
3. The Government of India's Income Deduction Program (80IB Tax 
Program)
    Pursuant to the Income Tax Act of 1961, as amended by the Finance 
Act 2007, Chapter VIA, 80IB(4) (India) (2007), the GOI has implemented 
a tax policy to foster economic development of certain ``industrially 
backward'' regions in India. The tax exemptions allowed under the 80IB 
Tax Program are only available to companies located in designated 
geographical areas (referred to as ``backward areas'' by the GOI) 
within India.\12\ Under the 80IB Tax Program, the GOI allows domestic 
companies that invest in economically less developed areas of India to 
reduce their corporate taxable income by up 100 percent of profit 
gained at production facilities located in designated geographical 
areas for a period of five years and by up to 30 percent for the next 
five years. The benefit is applied to the gross total income of the tax 
payer and is claimed when a company files its income tax return at the 
end of every financial year.
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    \12\ ``Industrially backward'' states are states and union 
territories specified in the Eight Schedule of the Indian tax code.
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    We preliminarily determine that the 80IB Tax Program is a 
countervailable program. Specifically, we preliminarily

[[Page 58126]]

determine that a financial contribution is provided under this program, 
in the form of foregone tax revenue, within the meaning of section 
771(5)(D)(ii) of the Act. We further preliminarily determine that the 
GOI provided a benefit under this program in an amount equal to the tax 
savings under section 771(5)(E) of the Act. In addition, we 
preliminarily determine that the program is limited to enterprises in 
geographically limited areas and, therefore, is specific within the 
meaning of section 771(5A)(D)(iv) of the Act.
    One of Navneet's manufacturing plants operates in a region that is 
designated by the GOI as an ``industrially backward'' territory of 
India and therefore, the company is eligible for the tax incentives 
described above. Navneet reported that it received tax deductions under 
this program during the POR on its 2006 corporate income tax return, 
which was the return filed by the company during the POR. The 
Department typically treats a tax deduction as a recurring benefit in 
accordance with 19 CFR 351.524(c)(1). Under 19 CFR 351.509(a), the 
benefit is equal to the difference between the income tax that the 
company would have paid absent the program and the income tax the 
company paid under the program. Therefore, to calculate the benefit, we 
subtracted the amount of 2006 income tax Navneet paid under the program 
from the amount of income tax Navneet would have paid absent the 
program.
    To calculate the net subsidy rate, we divided the benefit by 
Navneet's total sales for POR. On this basis, we preliminarily 
calculated an ad valorem rate of 0.47 percent.

II. Programs Preliminarily Determined Not To Be Used

A. Programs Administered by the Government of India
    1. Duty Replenishment Certificate Scheme.
    2. Advance License Program.
    3. Export Processing Zones and Export Oriented Units.
    4. Target Plus Scheme.
    5. Export Processing Zones.
    6. Income Tax Exemption Scheme (Sections 10A, 10B, and 80HHC).
    7. Market Development Assistance.
    8. Status Certificate Program.
    9. Market Access Initiative.
    10. Loan guarantees from the GOI.
    11. Exemption of Export Credit from Interest Taxes.
    12. Pre and Post-shipment Export Financing.
B. Programs Administered by the State Governments
    State Government of Gujarat Programs:
    1. State Government of Gujarat Provided Tax Incentives.
    State Government of Maharashtra Programs:
    2. Sales Tax Program from Maharashtra.
    3. Electricity Duty Exemptions Under the State Government of 
Mahatrashtra's (SGM) Package Scheme of Incentives of 1993.
    4. Refunds of Octroi Under the PSI of 1993, Maharashtra Industrial 
Policy (MIP of 2001) and Maharashtra Industrial Policy (MIP of 2006).
    5. Infrastructure Subsidies to Mega Projects.
    6. Land for Less than Adequate Remuneration (for firms operating in 
areas outside of the Bombay and Pune metropolitan areas).
    7. Loan Guarantees Based on Octroi Refunds by the SGM.

Preliminary Results of Review

    In accordance with 19 CFR 351.221(b)(4)(i), we have calculated a 
subsidy rate for Navneet for the period February 15, 2006, through 
December 31, 2006. We preliminarily determine the total estimated net 
countervailable subsidy rate for Navneet is 8.75 percent ad valorem for 
2006.
    If the final results of this review remain the same as these 
preliminary results, the Department intends to issue assessment 
instructions to U.S. Customs and Border Protection (CBP) 15 days after 
the date of publication of the final results of review. We will 
instruct CBP to collect cash deposits for Navneet at the CVD rate 
indicated above of the Free On Board (F.O.B.) invoice price on all 
shipments of the subject merchandise entered, or withdrawn from 
warehouse, for consumption on or after the date of publication of the 
final results of this review. We will also instruct CBP to continue to 
collect cash deposits for non-reviewed companies at the most recent 
company-specific or country-wide rate applicable to the company.
    These deposit requirements, when imposed, shall remain in effect 
until further notice.

Public Comment

    Pursuant to 19 CFR 351.224(b), the Department will disclose to 
parties to the proceeding any calculations performed in connection with 
these preliminary results not later than ten days after the public 
announcement of this notice. Pursuant to 19 CFR 351.309(c)(ii), 
interested parties may submit written comments in response to these 
preliminary results within 30 days after the publication date of these 
preliminary results. Rebuttal briefs, limited to arguments raised in 
case briefs, must be submitted no later than five days after the time 
limit for filing case briefs, unless otherwise specified by the 
Department, pursuant to 19 CFR 351.309(d)(1). Parties who submit 
argument in this proceeding are requested to submit with the argument: 
(1) A statement of the issues, (2) a brief summary of the argument, and 
(3) a table of statutes, regulations and case citied. Parties 
submitting case and/or rebuttal briefs are requested to provide the 
Department copies of the public version on disk. Case and rebuttal 
briefs must be served on interested parties in accordance with 19 CFR 
351.303(f). Also, pursuant to 19 CFR 351.310(c), within 30 days of the 
date of publication of this notice, interested parties may request a 
public hearing on arguments to be raised in the case and rebuttal 
briefs. Unless the Secretary specifies otherwise, the hearing, if 
requested, will be held two days after the date for submission of 
rebuttal briefs, that is, 37 days after the date of publication of 
these preliminary results.
    Pursuant to section 751(a)(3)(A) of the Act and 19 CFR 351.213(h), 
the Department will publish the final results of this administrative 
review within 120 days after the publication date of preliminary 
results including the results of its analysis of arguments made in any 
case or rebuttal briefs.
    These preliminary results of review are issued and published in 
accordance with sections 751(a)(1) and 777(i)(1) of the Act and 19 CFR 
351.221(b)(4).

     Dated: September 29, 2009.
David M. Spooner,
Assistant Secretary for Import Administration.
[FR Doc. E8-23565 Filed 10-3-08; 8:45 am]
BILLING CODE 3510-DS-P