Commission Decision No 842/2002/ECSC

of 21 May 2002

amending Decision No 284/2000/ECSC imposing a definitive countervailing duty on imports of certain flat rolled products of iron or non-alloy steel, of a width of 600 mm or more, not clad, plated or coated, in coils, not further worked than hot-rolled, originating, inter alia, in India and accepting an undertaking

THE COMMISSION OF THE EUROPEAN COMMUNITIES,

Having regard to the Treaty establishing the European Coal and Steel Community,

Having regard to Commission Decision No 1889/98/ECSC of 3 September 1998 on protection against subsidised imports from countries not members of the European Coal and Steel Community(1) ("the Basic Anti-subsidy Decision"), and in particular Article 20 thereof,

After consulting the Advisory Committee,

Whereas:

A. PREVIOUS PROCEDURE

(1) By Commission Decision No 284/2000/ECSC(2) ("the definitive countervailing Decision"), the Commission imposed, inter alia, a definitive countervailing duty of 13,1 % on imports of hot-rolled coils ("product concerned") originating in India, with the exception of imports from several Indian companies specifically mentioned, which are, exempted from the countervailing duty since the Commission accepted price undertakings from these companies according to Article 2 of the definitive countervailing Decision.

B. CURRENT PROCEDURE

(2) The Commission subsequently received two applications to initiate an accelerated review of the definitive countervailing Decision, pursuant to Article 20 of the Basic Decision, from the Indian exporting producers Ispat Industries Ltd and Jindal Vijanagar Steel Limited ("the companies"). The companies claimed that they were not related to any of the other exporting producers in India subject to the countervailing measures in force with regard to the product concerned. Furthermore, they claimed that they had not exported the product concerned during the original period of investigation (1 January 1998 to 31 December 1998), but had exported the product concerned to the Community since then.

(3) The product covered by the current review is the same product as the one under consideration in the definitive countervailing Decision.

(4) The Commission examined the evidence submitted by the companies and considered it sufficient to justify the initiation of a review in accordance with the provisions of Article 20 of the Basic Anti-subsidy Decision. After consultation of the Advisory Committee and after the Community industry concerned had been given the opportunity to comment, the Commission initiated, by a notice in the Official Journal(3), an accelerated review of Decision No 284/2000/ECSC with regard to the companies and commenced its investigation.

(5) The Commission informed the companies and the Government of India ("GOI"). Furthermore, it gave other parties directly concerned the opportunity to make their views known in writing and to request a hearing. However, no such request was received by the Commission.

(6) The Commission sent questionnaires to the companies and received replies within the deadline. The Commission also sought and verified all the information deemed necessary for the determination of subsidisation. Verification visits were carried out at the premises of the companies.

(7) The investigation of subsidisation covered the period from 1 April 1999 to 31 March 2000 (the "investigation period").

C. RESULTS OF THE INVESTIGATION

1. NEW EXPORTER QUALIFICATION

(8) The investigation confirmed that the companies had not exported the product concerned during the original period of investigation and that they had begun exporting to the Community after this period.

(9) Furthermore, the companies were able to satisfactorily demonstrate that they did not have any links, direct or indirect, with any of the other Indian exporting producers subject to the countervailing measures in force with regard to the product concerned.

(10) Accordingly, it is confirmed that the companies qualify for an accelerated review in accordance with Article 20 of the Basic Anti-subsidy Decision since they have not been investigated in the original investigation for other reasons than the refusal to co-operate, and thus an individual amount of subsidisation should be determined for the companies.

2. SUBSIDISATION

1. Introduction

(11) On the basis of the information contained in the replies to the Commission's questionnaire, the following five schemes were investigated:

- Passbook Scheme (PBS),

- Duty Entitlement Passbook Scheme (DEPBS),

- Export Promotion Capital Goods Scheme (EPCGS),

- Export Processing Zones (EPZ)/Export Oriented Units (EOU),

- Income Tax Exemption Scheme (ITES).

2. Passbook scheme (PBS)

(12) Neither of the companies concerned had availed themselves of the PBS, which on 1 April 1997 was abolished and replaced by its successor, the Duty Entitlement Passbook Scheme (DEPBS).

3. Duty Entitlement Passbook Scheme (DEPBS)

General

(13) It was established that Ispat Industries Limited received benefits under this scheme. This company made use of the DEPB on a post-export basis.

(14) Under this scheme, any eligible exporter can apply for credits which are calculated as a percentage of the value of exported finished products. Such DEPB rates have been established by the Indian authorities for most products, including the products concerned, on the basis of the Standard Input/Output norms. A licence stating the amount of credit granted is issued automatically.

(15) DEPB on a post-export basis allows for the use of such credits for the payment of import duty for any subsequent imports (e.g. raw materials or capital goods) except for goods subject to import restrictions. Such imported goods can be sold on the domestic market (subject to sales tax) or used otherwise. DEPB credits are freely transferable. The DEPB licence is valid for a period of 12 months from the date of granting of the licence.

(16) The characteristics of the DEPB on a post-export basis have not changed since the original investigation. The scheme is clearly a subsidy contingent upon export performance, and it was therefore determined during the original investigation that it is deemed to be specific and countervailable under Article 3(4)(a) of the Basic Decision.

Calculation of the subsidy amount

(17) It was established that Ispat Industries Limited used the DEPB licences to make duty-free imports. The benefit was therefore calculated on the basis of the import duties otherwise payable. In addition, this company sold some of its licences, and in these cases the benefit was calculated on the basis of the amount of credit stated in the licence regardless of the sales price of the licence. The sale of a licence at a price less than the face value is a purely commercial decision which does not alter the countervailable benefit from this scheme. Using the same calculation methodology as in the original investigation, the total amount of the licences used for duty-free imports and those that have been sold, has been allocated over total exports in the investigation period. Where the company claimed deductions linked to the payment of fees for obtaining the DEPB Licence, these were granted.

(18) Ispat Industries Limited benefited from this scheme during the investigation period and obtained subsidies of 8,0 %.

(19) The other company under investigation, Jindal Vijanagar Steel Limited, did not use DEPBS in the investigation period.

4. Export Promotion Capital Goods scheme (EPCGS)

General

(20) It was established that both companies had availed themselves of this scheme. To benefit from the scheme, a company must provide, to the relevant authorities, details of the type and value of capital goods which are to be imported. Depending on the level of export commitment which the company is prepared to undertake, the company will be allowed to import capital goods at either a zero rate of duty or a reduced rate. A licence authorising the import at preferential rates is issued automatically. In order to meet the export obligation, goods exported must have been produced using the imported capital goods. An application fee is payable to obtain a licence.

(21) The characteristics of the EPCGS have not changed since the original investigation. It was determined during the original investigation that the EPCGS is a subsidy as the payment by an exporter of a reduced or zero rate of duty constitutes a financial contribution by the GOI. Moreover, revenue otherwise due is foregone and a benefit is conferred on the recipient by lowering the duties payable or fully exempting him from paying the import duties.

(22) The subsidy is contingent in law upon export performance within the meaning of Article 3(4)(a) of the Basic Decision, since it cannot be obtained without a commitment to export goods, and is therefore deemed to be specific and countervailable.

Calculation of the subsidy amount

(23) Using the same calculation methodology as in the original investigation, the benefit to the exporter has been calculated on the basis of the amount of unpaid customs duty due on imported capital goods by spreading this amount across a period which reflects the normal depreciation of such capital goods in the industry of the product concerned. This period has been established by using the weighted average (on the basis of production volume of the products concerned) of depreciation periods for capital goods actually imported under the EPCGS by Indian producers during the original investigation period, resulting in a normal depreciation period of 18 years.

(24) Ispat Industries Limited obtained a benefit under this scheme of 1,8 %, and Jindal Vijanagar Steel Limited obtained a benefit of 5,7 %.

5. Export Processing Zones (EPZ)/Export Oriented Units (EOU)

(25) The Commission established that neither of the companies was located in an EPZ or was an EOU, and that they therefore did not receive any benefits under this scheme.

6. Income tax exemption scheme (ITES)

(26) It was established that neither of the companies concerned had availed themselves of the ITES.

7. Other schemes

(27) It was established that the new exporters had neither made use of new subsidy schemes which were established after the end of the original investigation period, nor had received ad hoc subsidies after this date.

D. AMENDMENT OF THE MEASURES BEING REVIEWED

(28) In the light of the foregoing, it is considered that definitive countervailing duties should be imposed at the level of the amount of subsidy found, but should not be higher than the country-wide injury margin established for India by the definitive countervailing Decision, i.e. 23,8 %.

(29) No individual injury margin can be established in a new exporter review since the investigation, pursuant to Article 20 of the Basic Decision, is limited to the examination of the individual subsidy margin.

(30) In accordance with Article 24(1) of the Basic Anti-subsidy Decision, no product shall be subject to both anti-dumping and countervailing duties for the purposes of dealing with one and the same situation arising from dumping or from export subsidisation. As countervailing duties should be imposed on imports of the product concerned it is necessary to determine whether, and to what extent, the subsidy and the dumping margin arise from the same situation.

(31) In the case in question, the schemes investigated in India have been found to constitute export subsidies within the meaning of Article 3(4)(a) of the Basic Anti-subsidy Decision. As such, the subsidies affect the normal value or export prices of the Indian exporting producers, thus leading to increased margins of dumping. In other words, the dumping margin established is wholly or partly due to the existence of export subsidies. In these circumstances the rates of anti-dumping duty established in Commission Decision No 283/2000/ECSC(4) ("the definitive Anti-dumping Decision") for the companies need to be adjusted to reflect the actual dumping margin, or injury margin if lower, which remains after the imposition of the countervailing duties offsetting the effect of the export subsidies.

(32) Accordingly, the rates of countervailing and anti-dumping duty applicable to the free-at-Community-frontier price, before duty and taking into account the results of the parallel anti-dumping and countervailing proceedings, shall be:

>TABLE>

(33) The amendment made by Article 1(1) of Commission Decision No 1357/2001/ECSC to the level of anti-dumping duty in Article 1(2) of Decision No 283/2000/ECSC, did not reflect the correct countervailing duties applicable at the date of its publication since the countervailing investigation was still ongoing at the time of the publication of the amending Decision to Decision No 283/2000/ECSC. Consequently Decision No 1357/2001/ECSC shall be repealed and any anti-dumping and countervailing duties collected in excess of the country-wide injury margin of 23,8 % shall be reimbursed. In view of the fact that the revised anti-dumping duties shall be levied retroactively from the date of entry into force of Decision No 1357/2001/ECSC and from the date of initiation of the newcomer review under Article 11(4) of the Basic Anti-dumping Decision in respect of Ispat Industries Ltd, and as the level of anti-dumping duty is assessed taking into account the level of export subsidy found, it is also appropriate to impose the countervailing duty retroactively to the same dates. The individual duty rates in recital 341 of Decision No 284/2000/ECSC were not listed in Article 1 of Decision No 284/2000/ECSC. Therefore, Article 1 of Decision No 284/2000/ECSC should be amended in order to expressly include these individual countervailing duty rates.

E. UNDERTAKING

(34) One of the companies, Isapt Industries Ltd offered a price undertaking concerning its exports of the product concerned to the Community, in accordance with Article 13(1) of the Basic Anti-subsidy Decision. This company has offered in parallel a price undertaking under the Basic Anti-Dumping Decision.

(35) After examination of the offer, the Commission considered the undertaking as acceptable since it would eliminate the injurious effects of the subsidisation pursuant to Article 13(1) of the Basic Anti-Subsidy Decision. Moreover, the regular and detailed reports which the company undertook to provide to the Commission will allow effective monitoring. Furthermore, the nature of the product and the sales structure of the company is such that the Commission considers that the risk of circumvention is limited.

(36) In order to ensure the effective respect and monitoring of the undertaking, when the request for release for free circulation pursuant to the undertaking is presented, exemption from the duty is conditional upon presentation to the customs service of the Member State concerned of a valid "Commercial Invoice" issued by Ispat Industries Ltd and containing the information listed in the Annex to the definitive Decision. Where no such invoice is presented, or when it does not correspond to the product presented to customs, the appropriate rate of countervailing duty should be payable in order to ensure the effective application of the undertaking.

(37) The information requested pursuant to the Annex has been updated. In order to ensure consistency in the monitoring of undertakings this revised Annex should apply also to all the companies referred to in Article 2(1) of Commission Decision No 284/2000/ECSC.

(38) In the event of a breach or withdrawal of the undertaking, or a suspected breach, a countervailing duty may be imposed, pursuant to Article 13(9) and (10) of the Basic Decision.

F. DISCLOSURE AND DURATION OF THE MEASURES

(39) The companies were informed of the facts and considerations on the basis of which it was intended to impose the amended definitive countervailing and anti-dumping duties on their exports of the product concerned to the Community.

(40) This review does not affect the date on which Decision No 284/2000/ECSC expires pursuant to Article 17 of the Basic Decision,

HAS ADOPTED THIS DECISION:

Article 1

Commission Decision No 284/2000/ECSC is amended as follows:

1. In the table in Article 1(2), the section headed "India" is replaced by the following: ">TABLE>"

2. In the table in Article 2(1), the following shall be inserted: ">TABLE>"

3. In Article 2(2), the reference to an "undertaking invoice" is replaced by "Commercial Invoice".

Article 2

1. The Annex to Commission Decision No 284/2000/ECSC is replaced by the Annex to this Decision.

2. Article 1(2) shall apply from 6 July 2001.

Article 3

This Decision shall enter into force on the day following that of its publication in the Official Journal of the European Communities.

This Decision shall be binding in its entirety and directly applicable in all Member States.

Done at Brussels, 21 May 2002.

For the Commission

Pascal Lamy

Member of the Commission

(1) OJ L 245, 4.9.1998, p. 3.

(2) OJ L 31, 5.2.2000, p. 44.

(3) OJ C 201, 14.7.2000, p. 2.

(4) OJ L 31, 5.2.2000, p. 15, as amended by Decision No 2009/2000/ECSC (OJ L 240, 23.9.2000, p. 12) and as last amended by Decision No 1357/2001/ECSC (OJ L 182, 5.7.2001, p. 27).

ANNEX

Information necessary for Commercial Invoices accompanying sales made subject to the undertaking (Article 2(2))

1. The heading "COMMERCIAL INVOICE ACCOMPANYING GOODS SUBJECT TO AN UNDERTAKING".

2. The name of the company issuing the Commercial Invoice.

3. The Commercial Invoice number.

4. The date of issue of the Commercial Invoice.

5. The TARIC additional code under which the goods on the invoice are to be customs-cleared at the Community frontier (as specified in the Decision).

6. The exact description of the goods, including:

- the company product code number (CPC) (if applicable),

- the product code number (PCN) (as established in the undertaking offered by the producing exporter in question),

- the technical specification of the PCN,

- CN code,

- quantity (to be given in tonnes).

7. The description of the terms of the sale, including:

- price per tonne,

- the applicable payment terms,

- the applicable delivery terms,

- total discounts and rebates.

8. Name of the first buyer acting as an importer to which the invoice is issued directly by the company.

9. The name of the official of the company that has issued the commercial invoice and the following signed declaration: "I, the undersigned, certify that the sale for direct export to the European Community of the goods covered by this invoice is being made within the scope and under the terms of the undertaking offered by ... (name of company), and accepted by the European Commission through Decision (842/2002/ECSC). I declare that the information provided in this invoice is complete and correct."