(30)

In its response to the disclosure, the applicant claimed that the post-export DEPB is a substitution remission/ drawback scheme which was wrongly assessed by the Commission in terms of extent of subsidy and amount of countervailable benefit. It argued that the Commission's assessment of the benefits under this scheme was incorrect since only the excess duty drawback could be considered a subsidy and that the practical operations of the system have not been investigated by the Commission. The Commission has repeatedly concluded (see for example Council Regulation (EC) No 1338/2002 (4) and in particular recitals 14 to 20) that post-export DEPB is not a drawback or a substitution drawback scheme as it does not conform to any of the provisions of Annexes I to III of the basic Regulation linked to its Article 2(1)(ii). The scheme lacks a built-in obligation to import only goods that are consumed in the production of the exported goods (Annex II of the basic Regulation) which would ensure that the requirements of Annex I(i) were met. Furthermore, there is no verification system in place to check whether the imports are actually consumed in the production process. It is also not a substitution drawback scheme because the imported goods do not need to be of the same quantity and characteristics as the domestically sourced inputs that were used for export production (Annex III of the basic Regulation). Lastly, exporting producers are eligible for the DEPB benefits regardless of whether they import any inputs at all. In the case of the applicant, the investigation confirmed that the raw materials were imported duty-free by one of its related companies with the use of the transferred DEPB credits of all related companies obtained from exports of different products. However, no link could be established between each company's credits and the actual imported goods from the sole related company assigned with the task of raw material imports. Furthermore, there was no verification system in place by the GOI to control what imports were actually consumed into what product and by which company. Since the above exception to the subsidy definition does not therefore apply, the countervailable benefit is the amount of the total credit granted under the scheme. For these reasons the claim cannot be accepted. The applicant further claimed that ‘the Commission's services failed to offset import duties from the costs, thus, rendering the subsidy calculations incorrect and exaggerated’. In this respect, it should be noted that the applicant was requested in advance and based on the situation described in recital 18 above to submit post-export DEPB credits listings for all its exports made during the review investigation period. The applicant was also requested to submit the same information for all exports made by its related companies for the same period, along with details of any application fees or other costs incurred in order to obtain the credits. However, the applicant has not reported any such details and was not in a position to provide such information during the on-spot verification. Therefore, due to the lack of any relevant information, no adjustment for such costs could be made on the amount of subsidy as established in recital 18.