COMMISSION IMPLEMENTING REGULATION (EU) 2019/2092

of 28 November 2019

imposing a definitive countervailing duty on imports of biodiesel originating in Indonesia

THE EUROPEAN COMMISSION,

Having regard to the Treaty on the Functioning of the European Union,

Having regard to Regulation (EU) 2016/1037 of the European Parliament and of the Council of 8 June 2016 on protection against subsidised imports from countries not members of the European Union (1) (‘the basic Regulation’), and in particular Article 15 thereof,

Whereas:

1. PROCEDURE

1.1. Initiation

(1) On 6 December 2018, the European Commission (‘the Commission’) initiated an anti-subsidy investigation with regard to imports into the European Union (‘the Union’) of biodiesel originating in Indonesia on the basis of Article 10 of the basic Regulation.

(2) The Commission published a Notice of initiation in the Official Journal of the European Union (2) (‘the Notice of initiation’).

(3) The Commission initiated the investigation following a complaint lodged on 22 October 2018 by the European Biodiesel Board (‘the complainant’ or ‘the EBB’) on behalf of producers representing 32 % of total Union production.

1.2. Provisional measures

(4) On 14 August 2019, the Commission imposed provisional countervailing duties on imports into the Union of biodiesel originating in Indonesia by Commission Implementing Regulation (EU) 2019/1344 (3) (‘the provisional Regulation’).

(5) As stated in recital 13 of the provisional Regulation, the investigation of subsidisation and injury covered the period from 1 October 2017 to 30 September 2018 (‘the investigation period’ or ‘IP’) and the examination of trends relevant for the assessment of injury covered the period from 1 January 2015 to the end of the investigation period (‘the period considered’).

1.3. Subsequent procedure

(6) Following the disclosure of the essential facts and considerations on the basis of which provisional countervailing duties were imposed (‘provisional disclosure’), the EBB, the Government of Indonesia (‘GOI’) and all four Indonesian exporting producers made written submissions making their views known on the provisional findings.

(7) The parties who so requested were granted an opportunity to be heard. Hearings took place with the EBB, the GOI, and all four Indonesian exporting producers.

(8) The Commission considered the comments submitted by interested parties and addressed them as detailed in this Regulation.

(9) The Commission informed all interested parties of the essential facts and considerations on the basis of which it intended to impose a definitive countervailing duty on imports into the Union of biodiesel originating in Indonesia (‘final disclosure’).

(10) Following final disclosure, the EBB, the GOI and three out of the four Indonesian exporting producers made written submissions making their views known on the definitive findings. The Commission noted that the submissions of the GOI and two exporting producers were in all respects the same, and in this Regulation these comments on final disclosure will be summarised as the comments of the GOI.

(11) The parties who so requested were granted an opportunity to be heard. Hearings after the final disclosure took place with the EBB, the GOI and two out of the four Indonesian exporting producers.

(12) In their comments to the final disclosure, the GOI and two of the exporting producers submitted that their rights of defence had not been respected, in particular regarding the undercutting calculations and the disclosure to interested parties of the product control numbers (‘PCNs’) of the Union industry used in the calculations, the feedstock used in the blends of the Union industry, and the cold filter plugging point (‘CFPPs’) (4) of the Union industry sales.

(13) The GOI and two out of the four Indonesian exporting producers requested a hearing in the presence of the Hearing Officer and such hearing took place on 14 October 2019.

(14) All of these points were already dealt with in the final disclosure and were explained to the GOI during the hearings that took place after the final disclosure was sent.

(15) The Commission considered the comments submitted by interested parties following final disclosure and addressed them as detailed in this Regulation.

1.4. Investigation period and period considered

(16) In the absence of comments concerning the investigation period and period considered, recital 13 of the provisional Regulation was confirmed.

2. PRODUCT CONCERNED AND LIKE PRODUCT

2.1. Claims regarding the product scope

(17) After the publication of the provisional Regulation, the Wilmar Group (‘Wilmar’), an exporting producer in Indonesia, made a claim that their exports of fractionated methyl esters should not be considered as exports of the product concerned. Wilmar noted that this claim had been made within the deadline, as it was to be found in Annex I of their sampling form.

(18) The claim was however not made separately, and therefore was not noted by other interested parties until the receipt of comments to the provisional Regulation.

(19) The Commission noted that the same claim was made during the previous anti-dumping investigation into imports of biodiesel from Indonesia by the same exporting producer on the basis of the same information, and was rejected in both the provisional Regulation (5) and the definitive Regulation (6) (‘the original investigation’).

(20) In this investigation, the Commission again rejected the product exclusion request for the same three reasons as set out in the previous anti-dumping regulation, as follows.

(21) First, fractionated methyl esters are fatty acid methyl esters and can be used for biodiesel. In this sense, biodiesel declared for non-fuel use can be used for fuel as it has the same physical and technical properties.

(22) Second, it is difficult to distinguish one fatty acid methyl ester from another without chemical analysis at the port of importation.

(23) Third, although fractionated methyl esters do not meet the European norm (EN 14214), they can be mixed with other biodiesels to create a blend that meets the norm.

(24) Wilmar also requested that the Commission confirms that as a matter of principle fractionated methyl esters can benefit from the customs procedure of end-use, where duties are exempted, provided the company can prove to the satisfaction of the national customs authority that the end use of the fractionated methyl ester is not fuel.

(25) The Commission noted that suspension of duties subject to end-use customs supervision has been granted on some imports of fractionated methyl esters as set out in Council Regulation (EU) 2018/2069 (7). However, this relief concerns only the autonomous Common Customs Tariff duties and is without prejudice to the application of the countervailing duties. Consequently, the Commission rejected the end-use relief request as far as the application of the countervailing duties is concerned.

(26) Following final disclosure, Wilmar again made its claim for end-use relief with respect to countervailing duties for their exports of fractionated methyl esters. No new information or reasons why end-use relief should be extended to provide relief from countervailing duties, was provided and the claim was therefore rejected. The Commission did not find any valid reason to exclude fractionated methyl esters from the product scope. Simply that fractionated methyl esters may be used by Wilmar on other uses than fuel does not mean that such a product type must be excluded from the scope of this investigation.

(27) In the absence of any other comments with respect to the product scope, the Commission confirmed the conclusions set out in recitals 31 to 37 of the provisional Regulation.

3. SUBSIDISATION

3.1. Government support to the biodiesel industry through direct transfer of funds via the Oil Palm Plantation Fund

3.1.1. Financial contribution

(28) Following the provisional disclosure, the GOI claimed that the Commission failed to prove the existence of a financial contribution in favour of the exporting producers.

(29) The GOI as well as all exporting producers claimed that the Oil Palm Plantation Fund (the ‘OPPF’) is exclusively financed by the collection of the export levy on crude palm oil (‘CPO’) and derivative products and in large part by the biodiesel producers themselves. Additionally, the GOI claimed that the export levy is paid directly by the exporting producers to the OPPF prior to exporting the goods. According to the GOI therefore no money is withdrawn from the general budget of the State and therefore there is no financial contribution.

(30) In this regard, the Commission reiterated that, as stated in the provisional Regulation in recitals 56 to 61, the Oil Palm Plantation Fund Management Agency (the ‘Management Agency’) acts as a public body in the sense of Article 2(b) of the basic Regulation read in conjunction with Article 3(1)(a)(i) of the basic Regulation and in accordance with the relevant WTO case-law. Therefore, the funds used by the Management Agency constitute public funds.

(31) Further, during the verification visit carried out at the GOI’s premises, the Commission sought to obtain and verify evidence to support the GOI’s claim that the OPPF’s funds are not part of the State budget. The GOI, however, could not provide such evidence.

(32) Instead, the GOI provided evidence indicating that the exporting producers did indeed pay the export levy prior to exporting their goods. However, it could not provide any indication that these payments are made into a specific account of the OPPF that would be distinct from the general State budget and would thus prevent the payments collected from the export levy on CPO and its derivative products from going into the general State budget and being used for any other purpose deemed fit by the GOI. Moreover, there is no indication that the OPPF has separate accounts for the collection of export levies derived from biodiesel and other products (including CPO). This implies that the funds available to the Management Agency are not dependent on the exporting producers of biodiesel first paying the levy, since the GOI may have already collected public revenue through the imposition of export levies upon other products. Thus, absent further evidence showing the contrary, the Commission confirmed the findings made in recital 64 of the provisional Regulation.

(33) The Commission further observed that the qualification of the OPPF as a public body was not disputed by neither the GOI nor any of the exporting producers. Hence, and considering the failure of the GOI to provide compelling evidence to the contrary, the funds available to the OPPF shall be considered as public funds and therefore drawn from government resources (such as the compulsory export levy).

(34) The GOI and all exporting producers additionally claimed that the Commission erred in analysing the payments of the OPPF in isolation, and not as part of the payment made by the GOI when purchasing biodiesel. The GOI and all exporting producers also claimed that the Commission mischaracterised the scheme as a grant, whereas it should be at most qualified as a government’s purchase of goods for more than adequate remuneration.

(35) For the reasons set out below, the Commission rejected the claim that the Commission examined the payments made by the OPPF in isolation and that the programme should be regarded as a purchase of goods (biodiesel) by the GOI.

(36) The Commission observed that the GOI does not purchase the biodiesel, which is purchased by the selected blenders instead (Pertamina and AKR). The GOI, via the OPPF, does not have any contractual purchase relation with the biodiesel producers and does not receive anything in exchange of the money it disburses to the biodiesel producers. The fact that the GOI has any contractual relation with the biodiesel producers has also not been claimed by any of the interested parties during the investigation.

(37) The applicable legislation mandates the biodiesel suppliers willing to participate in this programme to deliver the palm methyl ester (‘PME’) to the Petrofuel Entities (see recitals 45 and 46 of the provisional Regulation), Pertamina or AKR, which will then blend it with mineral diesel to obtain the B20 diesel. The applicable legislation gives the biodiesel producers participating in this programme the right to receive (a) the payment for the biodiesel by the blenders; and (b) the additional money from the OPPF. There are no contractual obligations of the biodiesel producers towards the GOI nor towards the OPPF, other than the duty to comply with the mandate received in accordance with the relevant rules and for which they receive compensation. Lacking any mutual contractual obligation, the money disbursed by the OPPF are not therefore part of a contract for consideration (such as the purchase of biodiesel by the government in exchange of a price). Simply put, the GOI mandates each of the biodiesel producers participating in the programme to sell specific quantities of biodiesel to Pertamina or AKR at a given price (mineral diesel reference price) and the GOI provides additional funds directly to the biodiesel producers. Whereas the purpose and context of the programme is to incentivise the use of biodiesel on the domestic market, the GOI does not purchase biodiesel directly and then uses it for governmental purposes or resells it on the market. Rather, the GOI supports the sales of biodiesel by providing additional funds to biodiesel producers also in transactions where private operators (such as AKR) are involved. Neither the GOI nor the exporting producers provided evidence showing that Pertamina and AKR are public bodies in this respect. They are operators which voluntarily participate in this programme.

(38) The Commission therefore examined the programme in this context and found that the disbursement of the OPPF in favour of the biodiesel producers cannot qualify as payments due in a purchase contract between the GOI and the biodiesel producers but constitute a direct transfer of funds, as concluded in recital 69 of the provisional Regulation.

(39) Following final disclosure, the GOI Wilmar, PT Pelita Agung Agrindustri and PT Permata Hijau Palm Oleo (together ‘Permata Group’) and PT Ciliandra Perkasa claimed that the payments from the OPPF cannot be considered as a financial contribution. According to the GOI this is because the OPPF is funded by the collection of the export levy on palm oil and derivative products, and therefore should be regarded as privately funded.

(40) The Commission observed that this claim was made already by the GOI after the provisional measures and was addressed by the Commission (recitals 30 to 33 above). No new evidence was provided by the parties in support of their repeated arguments. Consequently, the Commission confirmed the conclusions reached in these recitals and therefore rejected this claim.

(41) The GOI, PT Ciliandra Perkasa and the Permata Group additionally claimed that the Commission erred in confirming the findings that the OPPF funds are public money and not privately sourced for the reasons set out in recital 32. According to the GOI this is because the applicable provisions of Minister of Finance Regulation (EC) No 133/2015 and of Presidential Regulation 66 of 2018 mandate (1) that the OPPF shall be exclusively financed by the collection of the export levy, and (2) that those funds shall be used only for specific disbursements, including the grant pay-outs to the biodiesel producers.

(42) As explained in recital 31 above, during the verification visit, the Commission asked the GOI to provide evidence of how the payments of the export levy are accounted for in the budget. The GOI failed to provide any evidence in support of its claim that the funds of the OPPF are not part of the State budget.

(43) In any event, the above is irrelevant to the conclusion that the funds of the OPPF constitute public funds as explained in recital 63 of the provisional Regulation. The funds are collected pursuant to a compulsory export levy. Thus, as opposed to a situation where private operators freely decide to collect private funds for a particular use, in the present case, the GOI imposes an obligation upon some producers (including but not limited to biodiesel producers) to pay the export levy.

(44) Following final disclosure, the GOI, PT Ciliandra Perkasa, the Permata Group and Wilmar claimed that the Commission erred in classifying the payments of the OPPF as a grant, while they should be qualified as a purchase of biodiesel. According to the respondents, the Commission also erred in asserting that there is no contractual relationship between the biodiesel producers and the OPPF. To support its claim, Wilmar submitted copies of its agreements with the OPPF as well. According to the GOI, the payments of the OPPF should be regarded as consideration for the purchase of goods (namely biodiesel) because Pertamina is a state-owned company, and therefore it should be treated as a single economic entity with the GOI which is the ultimate purchaser of the biodiesel.

(45) The Commission considered that the contracts should have been submitted before for a proper verification. Even acknowledging that there are contracts in force between the OPPF and the biodiesel producers, the Commission noted that according to information provided by the GOI, these contracts do not create a contractual obligation of the biodiesel producers towards the OPPF. Rather, as explained by the GOI, these contracts merely restate the legal obligation of the OPPF to pay the difference between the price paid by the blenders and the biodiesel reference price once the relevant biodiesel producer delivers the biodiesel to Pertamina. Importantly, nowhere in those contracts it is stated that the GOI purchases biodiesel and that the payments are made because of such reason. Quite to the contrary, the contract in force between the OPPF and the biodiesel producers does not refer to any purchase of biodiesel made by the GOI, rather it contains the terms pursuant to which the GOI disburses the so-called ‘biodiesel financing funds’ to the biodiesel producers. More precisely, the contracts stipulate that the OPPF provides financing to the biodiesel producers, after the latter delivered biodiesel to one of the blenders and that delivery is verified.

(46) The Commission observed that the existence of contracts in place between the OPPF and the biodiesel producers does not change the conclusion reached by the Commission that the payments of the OPPF constitute a grant. This is because the only contracts with mutual obligations (i.e. the delivery of goods and the payment of the price) are the ones in force between Pertamina and the biodiesel suppliers. Consequently, the Commission rejected this claim.

(47) For the reasons set out below, the Commission also considered that the claim that Pertamina and the GOI should be regarded as a single economic entity cannot be accepted.

(48) As mentioned in recital 53 to 54, apart from being a State owned company, there is no other evidence that Pertamina is a public body and thus is part of the government. Moreover, in its claim the GOI failed to mention that Pertamina is not the only blender subject to the blending mandate, but during the investigation period AKR was also subject to the same mandate. At the same time, AKR as explained in recital 37 above is a private company. Both AKR and Pertamina operate the blending mandate pursuant the same legal instruments and under the same system. Under the blending mandate, therefore, the GOI does not purchase the biodiesel, unless the GOI also considers that AKR should be regarded as being part of the same economic entity.

(49) In light of the above, the Commission maintained its conclusion that Pertamina, despite being a State-owned company, acts as a market operator purchasing biodiesel from the biodiesel producers, in order to blend it with mineral diesel which is subsequently sold by Pertamina.

(50) The Commission therefore also maintained its conclusion that the payments by the Management Agency of the OPPF constitute a grant. As explained by the GOI neither in the applicable legislation nor in the contracts between the OPPF and the blenders there are reciprocal obligations. Rather, in the whole set-up of the blending mandate the only reciprocal obligations are between the biodiesel producers (having the obligation to supply the biodiesel) and the blenders (having the obligation to pay a price). In the Commission’s view, therefore, the Management Agency of the OPPF disburses the money without expecting anything in return. Hence, the pay-outs from the OPPF qualify as grants.

(51) Wilmar, the Permata Group and PT Ciliandra Perkasa additionally claimed that Pertamina, being entirely State-owned, should be regarded as a public body. None of the respondents provided any evidence in support of this claim.

(52) The Commission observed that if Pertamina should have been considered as a public body for the purposes of this investigation (purchasing biodiesel jointly with the Management Agency of the OPPF), the GOI should have raised this claim early in the investigation process and, should have instructed Pertamina to cooperate and be part of the investigation.

(53) The Commission considered that the State ownership per se does not equate to the notion of ‘public body’. As already explained in recital 55 of the provisional Regulation, the WTO Appellate Body in the Report on the US-Anti-Dumping and Countervailing Duties (China) found that the term ‘public body’ means an entity that ‘possesses, exercises or is vested with governmental authority’ (8). Mere formal indicia of control (such as state ownership) are insufficient for a public body finding (9).

(54) None of the parties substantiated their claims by elaborating how Pertamina is vested with governmental authority. The Commission noted that Pertamina, like AKR, has to comply with the obligations arising from the blending mandate. Yet, complying with a legal requirement does not mean that an entity has been vested with public authority. Additionally, Pertamina (just like AKR) simply purchases the biodiesel, and has no role in the disbursement of the grant in favour of the biodiesel producers.

(55) Finally, the Commission observed that AKR, a private company, is also part of the same mandate and has the same obligations as Pertamina. If one was to follow the respondents’ claims, the Commission would have no choice but to find that AKR as well is a public body, vested with governmental authority. Yet, in contradiction with their own reasoning, none of the respondents put forward such a claim. In fact the parties are silent on how their claim of joint purchase of biodiesel by Pertamina and OPPF reconciles with the system being applicable to privately owned AKR. The Commission therefore rejected the claim.

(56) In addition, Wilmar claimed that, even if Pertamina was not considered a public body, the blenders are entrusted and directed by the GOI to purchase biodiesel on behalf of the government and/or the biodiesel suppliers are entrusted or directed to sell biodiesel to the blenders. Wilmar did not provide any evidence in support of this claim. In fact, the evidence available rather shows that during the investigation period there is a programme in place where blenders and biodiesel producers willingly participate in the context where the GOI imposes certain blending requirements and where the GOI financially intervenes to ease the burden arising from the blending mandate.

(57) The Commission noted that the mere existence of an obligation to blend puts a legal obligation to purchase biodiesel, but does not entail that the GOI purchases biodiesel on the market. The GOI simply mandates the percentage of PME to be blended with mineral diesel. The GOI does not purchase PME nor does have the intention to purchase it.

(58) Hence, the Commission rejected this claim as well.

3.1.2. Benefit

(59) All exporting producers alleged that, even if the Commission was correct in qualifying the payments received by the OPPF as a grant, it erred in considering that there is a benefit.

(60) In summary, the exporting producers claimed that because the OPPF is financed exclusively by the export levy paid among others by the biodiesel producers, the latter do not receive a benefit as they pay more into the fund than what they receive from it. According to the exporting producers, the OPPF is privately funded and therefore the Commission should have deducted the amounts paid into the OPPF at a group level. Additionally, the exporting producers claimed that the Commission should have deducted the amount of levy paid on the export of every product subject to it, and not only the amount of levy paid for the export of biodiesel.

(61) For the reasons set out below, the Commission disagreed with this claim.

(62) First, the Commission observed that all the companies involved in the CPO value chain, including the biodiesel producers, are compelled to pay the levy by force of regulation. Just as for general taxation, undertakings active in the CPO value chain have no discretion whether to contribute or not into the OPPF, and therefore it is inappropriate to argue that the latter is privately funded. Rather, the OPPF is financed through the normal fiscal and public revenue collecting activity of the GOI. In fact, the GOI failed to provide evidence showing that the revenues collected through the export levy are directly accounted for in a specific account of the OPPF as opposed to the general State budget. Thus, deducting the export levies paid by biodiesel producers to determine the existence of benefit would be as inappropriate as deducting all taxes paid by the beneficiaries.

(63) Secondly, the Commission observed that in any event the claim that biodiesel producers paid more into the OPPF than what they have received is factually wrong. That claim is in fact based on the total export levy paid at group level and for all products subject to the export levy. However, by considering only the levy paid by the exporting producers (individually, not their group) on biodiesel, the amounts paid into the OPPF are lower than what has been received in grant payments by the OPPF.

(64) The GOI and exporting producers Wilmar, Permata Group and PT Ciliandra Perkasa further submitted that the Commission erred in finding that this programme grants a benefit in favour of the biodiesel producers. This is because, absent the payments of the OPPF, the blenders would be forced to purchase the biodiesel at the biodiesel reference price. Hence, the biodiesel producers would receive the same amount of money that they receive today and are therefore not ‘better off’ than they would otherwise be.

(65) The Commission disagreed with this claim. The Commission concluded that the correct counterfactual is not that absent the OPPF the blenders would pay the biodiesel reference price. One of the policy objectives of the OPPF and the very purpose of blending mandates is to foster the use of biodiesel in Indonesia (as opposed to the use of mineral diesel). Since the price of mineral diesel is normally lower than the price of biodiesel, the GOI intervenes to facilitate the sale of biodiesel by biodiesel producers. At the same time, these payments contribute to the fulfilment of the mandatory blending requirements. The mere existence of the OPPF programme shows that the normal market conditions would not support the biodiesel reference price which is used to top up the transactions between Pertamina/AKR and the biodiesel producers. Thus, without the blending mandate, blenders would not have an incentive to purchase biodiesel at all. Absent the OPPF and its payments there would not be any domestic sales of biodiesel. Biodiesel producers would have to compete with mineral diesel producers. But for the OPPF and the programme put in place by the GOI, biodiesel producers would not receive the additional funds to the level of the biodiesel reference price fixed by the GOI.

(66) In the Commission’s view, under the correct counterfactual, the biodiesel producers would be worse off than during and after the investigation period. For biodiesel producers the blending mandate effectively means having a predictable and reliable source of income via guaranteed sales. Additionally, the total revenues of domestic sales, i.e. the amount paid by the blenders plus the grant disbursed by the OPPF, are determined ex ante by the GOI, effectively shielding biodiesel suppliers from normal price fluctuations that they would otherwise face on a free market, assuming there would be one.

(67) In that respect, the Commission also took the view that the calculation of the reference price for biodiesel paid to independent suppliers does not reflect demand and supply under normal market conditions without government intervention. Pertamina, in fact, irrespective of whether it received a benefit or not, was not willing to pay the biodiesel at the reference price, but only at a lower price. This finding has also been confirmed by the GOI during the verification visit when it explained that if Pertamina was to purchase biodiesel at the biodiesel reference price, it would be loss making. This statement evidenced that, under undistorted market conditions, the market price for biodiesel would be significantly lower than the biodiesel reference price currently set by the GOI.

(68) The Commission inferred from the GOI’s statement that no buyer — just as Pertamina — would be in a position to profitably carry on business if the price of biodiesel would be the reference price set by the GOI. Hence, either there would be no biodiesel sold in Indonesia, and therefore no revenues for the biodiesel producers, or the biodiesel prices would be lower than the level set by the GOI. As in Indonesia the GOI sets up and implements a blending obligation (see recitals 49 and 50 of the provisional Regulation), the first scenario is very unlikely to happen. Hence, the Commission considered that — absent the scheme under analysis — the most likely counterfactual was that the prices of biodiesel would be lower.

(69) Notably, the Commission observed that the reference prices used by the GOI to determine the amount of grant disbursed by the OPPF are not indicative of a market price as the formula to calculate them is not based on an undistorted market reality. This is because on the one hand the whole market, upstream and downstream, is distorted and cannot be therefore representative of normal, competitive, market conditions. On the other hand, the Commission considered that the amount of the conversion costs calculated by the GOI as part of the formula used to calculate the reference price for biodiesel (the average domestic price for CPO and a conversion fee of USD 100 per tonne added to that) is excessive. The Commission verified the actual transformation costs of some of the exporting producers and observed that the GOI’s calculation overstates those costs. These actual transformation costs amounted to, on average, an amount between USD 60 to USD 80 per tonne during the investigation period (10).

(70) Therefore, even if the Commission was to accept the claim that the combined payments of the blenders and the OPPF constitutes payment of the price of biodiesel, quod non, the Commission would nonetheless have to conclude that the ‘price’ paid to biodiesel suppliers would be excessive.

(71) The Commission thus concluded that the existence of the programme puts the biodiesel producers in a better situation than they would otherwise be and therefore confers them a benefit.

(72) The GOI and all exporting producers also claimed that, even if there was a benefit, it would be entirely passed on to the blenders (Pertamina and AKR). This is because the biodiesel producers allegedly get the market price for biodiesel while the blenders benefit from purchasing it at a lower price (namely, the reference price for mineral diesel).

(73) The Commission did not agree with this claim. As already discussed in recitals 195 to (201) of the provisional Regulation, and also addressed in recital 67, the Commission took the view that in Indonesia there is no real market price for biodiesel as the GOI regulates and distorts the whole CPO-biodiesel value chain. In any event, the Commission observed that the only price existing on the market is the one that was paid by the blenders (namely, the reference price for mineral diesel).

(74) With regard to the claim that the benefit of the programme lays with the blenders which ultimately pay a lower price for the biodiesel they purchase, the Commission noted that the issue whether Pertamina or AKR (also) benefit from this programme is not subject of this investigation, since they are not exporting producers of the product concerned.

(75) Following definitive disclosure the GOI, PT Ciliandra Perkasa, Permata Group and Wilmar claimed that the Commission erred in finding that the OPPF confers a benefit to the biodiesel producers because: (a) the counterfactual identified by the Commission is incorrect insofar as it finds that absent the OPPF biodiesel producers would receive a lower price for their biodiesel. According to the GOI, absent the OPPF and lacking any legal obligation on the producers to sell biodiesel domestically, biodiesel producers would simply maximise their profit and sell on the export market; and, (b) The conversion cost used by the GOI in the formula to calculate the biodiesel reference price is not excessive as it does account for SG&A and profit.

(76) The Commission considered the counterfactual presented in the final disclosure and spelled out in recital 65 above. The Commission, however, considered that the claim laid down by the GOI further confirms that the OPPF confers a benefit to the biodiesel producers. The GOI’s argument relies on two main elements: (1) there is no legal obligation for biodiesel producers to sell biodiesel domestically; and, (2) biodiesel producers are rational economic operators striving to maximise their profit.

(77) The Commission did not contest the two elements put forward by the GOI. In the Commission’ view, the fact that despite the lack of a legal obligation to do so, rational economic operators like the biodiesel producers decide to take part to the OPPF scheme is empiric and undisputable evidence that this is their best option to operate their business.

(78) If, as the GOI claimed and the Commission had no reason to contest, ‘the privately-owned biodiesel producers (many of which are part of multinational groups) aim to maximize profitability’ (11), then it means that being part of the OPPF scheme is the most profitable way of carrying out business available to them. Hence, under every counterfactual the biodiesel producers would be worse off. If that would not be the case, a rational economic operator, free from any legal constraint, would have chosen a more profitable option instead of opting to be part of the scheme.

(79) The Commission therefore concluded that the biodiesel producers are better off under this scheme regardless of the alternative counterfactual. Consequently, the Commission confirmed its conclusion that the OPPF confers a benefit to the biodiesel producers.

(80) With regard to the GOI’s claim that the conversion costs used in the formula to calculate the biodiesel reference price is not excessive, the Commission observed that it considered that the payments by the OPPF to biodiesel producers constitute a grant and are not part of the consideration for the purchase of biodiesel. Therefore, in the Commission’s view, it was irrelevant for the determination of the existence of a benefit whether those conversion costs are excessive or not.

(81) In any event, even if the Commission were to follow the GOI’s line of reasoning that there is no benefit in this case because the payments of the OPPF are the consideration for the purchase of biodiesel, the Commission observed that the amount of conversion costs is not changed regularly and it has been set at 100 USD/tonne since 21 March 2016. The Commission acknowledged that the GOI claimed during the verification visit that the conversion costs are reviewed annually. The Commission however considered that the result of such a review process does not reflect market reality as the amount of conversion costs is higher than the real costs incurred by biodiesel producers as explained in paragraph (69).

(82) The GOI also claimed that it considered the range of conversion costs collected by the Commission to be non-representative. In this regard the Commission first observed that the GOI did not provide any factual evidence to support its statement. Secondly, the Commission observed that it verified those costs during the verification visits carried out at some of the biodiesel producers’ premises. For the sake of clarity, to obtain those costs the Commission deducted the value of the glycerine generated in the refining process from CPO to biodiesel (12).

(83) In light of the above, even if the Commission were to accept the GOI’s claim that the payments of the OPPF are the consideration for the purchase of biodiesel, quod non, then there would still be a benefit in favour of the biodiesel producers. Even if the blending mandate would not exist, biodiesel producers would not obtain the full compensation provided by the OPPF.

(84) Wilmar additionally claimed that the reference price set for domestic Indonesian biodiesel reflects and closely follows undistorted market dynamics. The Commission observed that the Indonesian domestic biodiesel market is entirely regulated, from the price of the CPO to the price and demand of biodiesel. Biodiesel suppliers have to sell specific quantities at a specific price, calculated according to a formula fixed in advance and based on elements that do not adhere to market reality. The Commission therefore maintained its conclusion that the reference price set by the GOI does not reflect what the price would be under undistorted market conditions. Particularly, this is because the Commission considered that the only reliable proxy for an undistorted domestic market price is the one that the blenders pay. The claim was therefore rejected.

(85) Following definitive disclosure, the GOI and Wilmar claimed that the Commission erred in considering irrelevant that the OPPF confers a benefit to the blenders as well. According to the GOI, this is because the very fact that the OPPF is designed to benefit the blenders (as well) means that it cannot be qualified as a grant.

(86) As explained in recitals 64 to 74, the Commission considered that whether the blenders obtained a benefit from the programme at issue is not relevant for the purpose of the present investigation. It is uncontested that the OPPF provides a grant in favour of the biodiesel producers, a grant which, absent the programme would not have taken place. The claim was therefore rejected.

3.1.3. Methodology used in the calculation of the total amount of benefit

(87) All exporting producers claimed that the Commission erred in calculating the amount of benefit received by the exporting producers as it included the amount of money paid by the OPPF as reimbursement for transport costs. According to the exporting producers, this money is merely a reimbursement of costs already incurred by them and therefore not a benefit. Additionally, an exporting producer claimed that these costs shall be qualified as a cost incurred to be eligible for the subsidy scheme and shall be therefore excluded pursuant to Article 7(1)(a) of the basic Regulation.

(88) For the reasons set out below, the Commission disagreed with this claim as it does not consider transport costs incurred by the biodiesel producers as ‘any application fee or other costs necessarily incurred in order to qualify for, or to obtain, the subsidy’.

(89) First, the Commission observed that the Guidelines for the calculation of the amount of subsidy in countervailing duty investigations (‘the Guidelines’) clarify that ‘the only fees or costs that may normally be deducted are those paid directly to the government in the investigation period. It must be shown that such payment is compulsory in order to receive the subsidy. Thus payments to private parties, e.g. lawyers, accountants, incurred in applying for subsidies, are not deductible’ (13).

(90) Contrary to what is stipulated in the Guidelines, the transport costs in question are not paid directly to the GOI but to private companies. Nor did the exporting producer explain how these transport costs are ‘compulsory’ to receive the subsidy.

(91) Second, the Commission took the view that the transport costs are rather costs normally incurred by biodiesel producers in their commercial transactions with the blenders. Transport costs would normally be part of the purchase price/contract and the Commission therefore sees no objective justification for their reimbursement. Consequently, the amount of money paid by the OPPF as reimbursement for transport costs constitutes a benefit.

(92) In light of the above, this claim was rejected and the Commission concluded that the reimbursement of the transport costs incurred by the biodiesel producers shall not be deducted from the calculation of the benefit. The funds provided by the Management Agency to the biodiesel producers not only cover the difference between the reference price of mineral diesel and the reference price for biodiesel but also the transport costs, as part of the same grant.

(93) The exporting producers also claimed that they incur credit costs relating to the OPPF payments. According to the biodiesel producers this is because the OPPF disburses the grant payment several months after the producers have invoiced the relevant blender.

(94) The Commission disagreed with this claim as it maintained its conclusion that the payments of the OPPF constitute a grant and not payment for the purchase of goods. The Commission therefore considered that the exporting producers should have not received those grants in the first place and that no credit cost of any sort can be attached to those grants.

(95) In light of the above, this claim is rejected and the Commission concluded that alleged credit costs incurred by the biodiesel producers shall not be deducted from the calculation of the benefit.

(96) Consequently, the Commission maintained its findings that the GOI’s support to the biodiesel industry through direct transfer of funds via the ‘Biodiesel Subsidy Fund’ amounted to a countervailable subsidy, as concluded in recitals 80 to 83 of the provisional Regulation.

(97) Following final disclosure, the GOI, PT Ciliandra Perkasa, the Permata Group and Wilmar claimed that the Commission erred in rejecting the exporting producers’ claim that the Commission should have deducted transport costs and credit costs from the calculation of the benefit. According to the GOI, this is because these costs are necessarily incurred in order to obtain the grant pay-outs.

(98) The Commission already discussed this claim in recital 89 above. In addition to what already explained in recital 91 above, the Commission noted that according to the Guidelines ‘the only fees or costs that may normally be deducted are those paid directly to the government in the investigation period’. In this case, the transportation costs are not paid to the Government, rather they are paid to private parties and then reimbursed by the GOI. The Commission therefore maintains its conclusion that the transport costs do not qualify as costs that can be deducted according to the Guidelines. The claim is therefore rejected.

(99) Following final disclosure, the GOI claimed that the Commission erred in not deducting inputs to the OPPF in its calculation of the benefit received under this scheme. However, these inputs related to payment of export levies set by the GOI on various CPO based products exported from Indonesia. These levies were therefore collected for many other products than the product under investigation. As explained in recital 64 of the provisional Regulation and further explained in recital 62 above, these levies are public resources. This point is correct whichever Government body was responsible for their collection. Therefore it was concluded that it was not appropriate to deduct inputs to the OPPF from the benefits received. This claim was therefore rejected.

(100) Also following final disclosure, the GOI claimed that the Commission erred in using the turnover of biodiesel for the determination of the subsidy amount. The claim was that the total turnover of the biodiesel producers (and thus including products other than biodiesel) should have been used. However, the subsidies granted from the OPPF were solely because the producers had sold biodiesel. Consequently, the Commission considered that it had used the correct turnover in its calculation and this claim was therefore rejected.

(101) The Commission observed that the GOI did not put forward any further arguments to support its claims and therefore confirmed its findings in recital 95.

3.2. Government support to the biodiesel industry through the provision of CPO for less than adequate remuneration

(102) Following provisional disclosure, the GOI as well as most of the exporting producers claimed that the Commission erred in qualifying the export restraints imposed by the GOI on CPO and its derivatives as a countervailable subsidy. According to the GOI and the exporting producers, this is because the WTO case-law consistently considers export restraints not to be countervailable subsidies.

(103) Concerning this claim, the Commission observed that the provisional Regulation does not consider export restraints per se as countervailable subsidies. Rather, the Commission considered that the imposition of export restraints (such as export taxes and levies) is one of the means or tools used by the GOI to provide CPO for less than adequate remuneration. The Commission found (see recital 172 of the provisional Regulation) that, in view of the available evidence in this investigation, and in accordance with the EU and WTO case-law, the provision of CPO for less than adequate remuneration amounted to a countervailable subsidy.

(104) The Commission will address below the claims raised by interested parties as regards the Commission’s provisional findings that the GOI’s support to the biodiesel industry through the provision of CPO for less than adequate remuneration amounts to a financial contribution under Article 3(1)(a)(iv) of the basic Regulation and/or income or price support under Article 3(1)(b) of the basic Regulation. The Commission will also address the allegations concerning errors in the determination of benefit.

(105) Following final disclosure, the GOI and the Permata Group claimed that export restraints imposed by a government can never amount to a financial contribution. In this regard, the Commission observed that this claim is irrelevant for the purposes of this case. This is because the Commission concluded that the financial contribution granted by the GOI in favour of the exporting producers derives from the provision of CPO for less than adequate remuneration. The claim was therefore rejected.

3.2.1. Failure to prove the existence of a financial contribution

(106) Following final disclosure, the GOI, the Permata Group and Wilmar claimed that the Commission failed to prove that there is a financial contribution. In the respondents’ view, this is because: (a) The export restraints were not collected during the investigation period as the export tax was suspended during the investigation period and the export levy was suspended after the investigation period. Additionally, that suspension indicates that the GOI no longer has the intention to impose export restraints; and, (b) The Commission failed to prove entrustment or direction of the CPO suppliers.

(107) With regard to the claim sub (a) above, the Commission observed that during the investigation period the export levy was in force and was collected. Hence, the GOI’s claim that export restraints were not collected during the investigation period is factually incorrect since the export levy was in place and had an effect during the investigation period.

(108) The Commission disagreed with the second leg of the argument. If the GOI had the intention to no longer impose export restraints on CPO and derivatives, it would have repealed the legislation. Temporarily setting the rate of export levy and export tax at zero indicates that the GOI still intends to be able to make use of these restraints in the future. This finding can also be corroborated by public statements of members of the GOI. One press article dated 25 September 2019 for example reports the following: ‘The government has decided to suspend an export tax imposed on crude palm oil (CPO) and its derivative products until next year to ease the financial burdens of palm oil producers amid a drop in CPO prices on the world market. Economic Coordinating Minister Darmin Nasution, said in Jakarta on Tuesday that the export tax was suspended until January next year as the government officially begins the implementation of its mandatory B-30 biodiesel program. Darmin said he hoped the implementation of the B-30 biodiesel policy, which was supposed to significantly raise the demand for palm oil, would be able to push up palm oil prices in the domestic market. He said that the suspension of the export tax had been approved by President Joko “ Jokowi ”Widodo. Based on a 2019 Finance Ministry regulation, the government would have imposed an export tax of up to $25 per ton if prices hovered between $570 and $619 per ton and up to $50 if it goes beyond $619 per ton. As of Sept. 20, the CPO price was at $574.9 per ton and it is expected to slightly fall to $570 per ton until the end of this year. The minister therefore called for the revision of the regulation to allow for the suspension of the export tax because, if based on the above price formula, it was still applicable’ (14).

(109) This statement also establishes a direct link between imposition of export restraints (together with other elements to induce the specific conduct from CPO suppliers) and the actual level of prices on the domestic market. It also demonstrates that the GOI uses those instruments in order to influence the level of those prices.

(110) Despite the GOI’s and Wilmar’s allegation in its response to definitive disclosure, the Commission concluded that the GOI’s intention in the future is to continue using the export levy and possibly the export tax. The fact that the GOI temporarily did not collect taxes and levies, also bearing in mind that these are only some of the tools of the GOI to provide CPO for less than adequate remuneration, cannot therefore call into question the existence of a financial contribution.

3.2.2. Failure to prove entrustment or direction under Article 3(1)(a)(iv) of the basic Regulation

(111) According to all exporting producers, the Commission’s allegation of entrustment or direction rests upon the incorrect finding that the tax and export levy on CPO and its derivatives imposed by the GOI are designed to support the biodiesel industry. In addition, Wilmar and Permata alleged that the Commission wrongly found that the domestic CPO prices are de facto set by PT Perkebunan Nusantara, a CPO producer wholly owned by the GOI (‘PTPN’).

(112) With regard to the first claim, exporting producers further clarified that during the investigation period the export tax was set at zero and therefore is irrelevant for the assessment. The export levy on the contrary was not at zero, and that in any event it was not designed to support the biodiesel industry, but to finance the OPPF.

(113) The Commission acknowledged in recital 88 of the provisional Regulation that during the investigation period the export tax was set at zero. Yet, even if it was not implemented during the investigation period in view of the specific market circumstances, the export tax constitutes evidence of the tools used by the GOI to induce CPO suppliers to provide CPO for less than adequate remuneration. Moreover, the Commission observed that the export tax, albeit at zero during the investigation period, has not been repealed by the GOI. The Commission also observed that, as discussed in recitals 117 to 121 of the provisional Regulation, it has not been contested that the GOI’s intention of using the export tax is to keep domestic CPO prices artificially low.

(114) With regard to the export levy, the Commission observed that, whilst the legislation imposing export levy does not mention explicitly that it is designed to support the biodiesel industry by providing CPO at lower prices, the export levies which become part of the OPPF de facto support exclusively the biodiesel industry via the OPPF’s grants. During the investigation, the Commission could indeed verify that, despite a broader formal remit, the OPPF has been supporting almost exclusively the biodiesel industry during the investigation period.

(115) Moreover, the introduction of the export levy in 2015 by the GOI coincided with a period where Indonesian CPO prices were nearly identical to world prices. In this regard, and as already demonstrated in recitals 64 to 68 of the provisional Regulation, the export levy shall not be regarded in isolation, but as part of a broader set of measure designed to support the biodiesel industry and regulate domestic CPO prices.

(116) Moreover, the Commission observed that in practice the export levy has achieved the intended objective of depressing the domestic CPO prices. In its analysis, the Commission could in the first place observe a difference between the domestic prices and the export prices of Indonesian CPO. The Commission considered that this price difference can be explained by the fact that the very imposition of the export levy depressed the domestic prices by artificially keeping CPO in the country at the low prices set by the GOI and de facto followed by CPO suppliers.

(117) The fact that the GOI did not repeal the export tax but only set it at zero clearly indicates that it still maintains the intention to keep the CPO prices low. Having put in place two instruments that have the same effect on the domestic CPO prices, and having achieved the desired effect, the GOI therefore had rationally decided to keep active the one with the widest range of desired effects (i.e. keeping the CPO prices low and financing the OPPF), i.e. the export levy.

(118) Therefore, the Commission confirmed that the overall system of export restraints put in place by the GOI is designed to benefit the biodiesel industry by keeping domestic prices of CPO artificially low (as opposed to a mere side-effect of a government measures to collect public revenue).

(119) With regard to the claim that domestic CPO prices are not de facto set by the GOI, Wilmar further alleged that the Commission’s conclusion was incorrect because: (a) The bids placed by interested buyers are generally based on international market prices; (b) The tendering process is very competitive, and PTPN can counter-offer if the price is deemed too low; (c) There is no evidence supporting the Commission’s claim that PTPN does not act as a rational operator; (d) The domestic CPO suppliers, based on the results of tenders, choose whether to sell their CPO and at which prices; (e) The fact that PTPN sells CPO via public tenders makes it a price taker rather than a price setter.

(120) With regard to the claim under (a) above, the Commission recalled that, as noted in recitals 91 to 99 and 126 of the provisional Regulation, the Commission had to rely on facts available in view of the lack of cooperation of CPO suppliers and PTPN. In their comments on the provisional Regulation no exporting producer provided any evidence concerning how they formulate their bids for CPO, other than vaguely claiming that they are based generally on ‘international market prices’.

(121) The Commission, lacking any verifiable evidence supporting this statement, rejected this claim accordingly. Rather than independently setting their prices in view of international prices, CPO suppliers follow the CPO prices effectively set by PTPN.

(122) With regard to the claim under (b) above, the Commission explained in recital 133 of the provisional Regulation that PTPN is in fact under no obligation to counter-offer a higher price if the bids received are below the ‘price idea’ for that specific day. In fact, the Commission confirmed during the verification visit that PTPN regularly accepted offers below such a price.

(123) The Commission additionally observed that, as explained in section 3.3.2 of the provisional Regulation, it applied the provisions of Article 28(1) of the basic Regulation as PTPN failed to reply to Appendix B attached to the anti-subsidy questionnaire (questionnaire for palm oil suppliers) to all producers and distributors of palm oil. Furthermore, during the verification visit at the GOI’s premises, PTPN failed to explain how it determines the daily ‘price idea’ for CPO. PTPN instead vaguely explained that it is based on international benchmarks without providing any detailed information.

(124) The Commission therefore could not obtain any evidence that the ‘price idea’ reflects a market price resulting from a competitive tendering process. Rather, the Commission found that the domestic CPO price is lower than any of the alleged international benchmarks (including the Indonesian export price) which were alleged to be the basis of PTPN’s prices.

(125) With regard to the claim (c), the Commission observed that as far as PTPN is concerned, it did not provide a reply to the Commission’s questionnaire mentioned above. The Commission therefore applied facts available. During the GOI verification, PTPN submitted a copy of its audited accounts for 2016 and 2017. These showed that PTPN operated at a loss. At a later stage and even beyond the deadline for comments on the letter announcing that the Commission would apply facts available, PTPN provided additional information. The GOI claimed that such additional information should change the Commission’s assessment. The Commission noted that the information was provided very late and well beyond any deadlines. PTPN did not submit audited accounts for the year 2018. As regards the latest period, the Commission therefore only received audited accounts for one quarter of the investigation period (last quarter of 2017). The audited accounts that the Commission received showed that PTPN operated at a loss. The belated information submitted by the GOI regarding the period from 2016 to the investigation period (in particular an excel table) attempts to show that PTPN’s CPO business (which accounts for the majority of its activities) was profitable and that the company achieved the same profit on its domestic and export sales. This information, however, was not supported by audited accounts. In contrast, the information provided on the basis of audited accounts confirmed that PTPN was not making profits when selling its CPO, thereby failing to act as a rational economic operator would. In any case, the Commission noted that information submitted at such a late stage (even after the comments on the provisional Regulation) cannot be accepted because it cannot be verified. Consequently, the claim was rejected.

(126) With regard to the claim (d), the GOI and exporting producers also claimed that the Commission failed to prove that the conduct of CPO suppliers was irrational as they were profitable. This claim relates to CPO suppliers that provided replies to the Commission’s questionnaire as well as to PTPN (15).

(127) The Commission considered that the notion of irrational behaviour is not limited to operating a business at a loss but includes also actions that put a business operation at a less advantageous (less profitable) position. The Commission established a clear price difference between domestic and export CPO prices in Indonesia, so that but for the export levy, selling for export would be more profitable for CPO suppliers.

(128) Additionally, the finding that the export restraints system put in place by the GOI effectively prevents domestic CPO producers to act rationally is corroborated by the fact that exports are expected to raise as a result of lifting the export levy. In this regard, in a recent press article, the following was noted: ‘The Indonesian Palm Oil Association, or GAPKI, projected that the country’s CPO exports may jump 10 % to 15 % after the export levy is reduced to zero, down from $50 per tonne previously, secretary general Togar Sitanggang said. Mr Sitanggang estimated that Indonesia’s monthly CPO exports have already risen to between 800,000 tonnes and 900,000 tonnes, up from an average of 700,000 tonnes before. “It would not be surprising that monthly CPO exports would hit one million tonnes if the zero export levy stays,” he added. Indonesia has already exported 6m tonnes of CPO this year, about one-fifth of its year-to-date overall exports of CPO and other palm oil derivatives, GAPKI’s estimates show’ (16).

(129) Another press article further corroborates the finding that the collection of the export levy has the effect of inducing CPO suppliers to sell domestically instead of selling for more profit on the export market. In that article an independent analyst found ‘this news (i.e. the setting of the export levy at zero) as positive for upstream planters with exposure to Indonesia, as the revision in export levy rates could help support CPO prices at their current levels. However, Ng does not expect on FY19F-20F net profit for planters — and cautions that the news is negative for Indonesian downstream processors as the revised levy at lower CPO prices will erode their margin advantage, which is currently the prices difference between CPO and processed palm products. “We maintain our view that the removal of export levy will raise the competitiveness of Indonesian palm oil product exporters as they would have saved between US$20-50 per tonne export tax when CPO price is below US$570 per tonne. The bulk of the savings is likely to flow back to the Indonesian farmers via higher domestic CPO price s”’ (17).

(130) This latter press article also corroborates the finding that the intended effect of the export levy, namely to suppress domestic CPO prices, was achieved. The fact that there are some exports of CPO from Indonesia does not mean that the measures taken by the GOI to keep CPO within Indonesia did not induce CPO suppliers to follow an irrational economic behaviour. In light of the above, the Commission therefore rejected these claims.

(131) Finally, with regard to the claim (e), the Commission observed that in order to support its argument that PTPN acts as a price taker, Wilmar only partially quotes recital 146 of the provisional Regulation. By doing so, Wilmar claimed that the Commission reached a conclusion which in reality contradicted the conclusion reached in that recital. Particularly, after stating that ‘Also, the investigation indicated that in terms of negotiating power the market is significantly imbalanced in favour of CPO buyers’, as correctly quoted by Wilmar, the Commission further explained that ‘(…). In this context, any purchaser will have a significant degree of buying power, such that it can resist any attempt from its supplier to ask for a price higher than that set by the GOI. Hence, the Commission concluded that by communicating transparently the daily CPO prices, the GOI is, through PTPN, effectively setting the maximum daily CPO prices in Indonesia’. Recital 146 of the provisional Regulation therefore reached a conclusion opposite to the one claimed by Wilmar. PTPN in fact acts as a price setter of CPO in the market since CPO suppliers de facto follow such a price, despite of the market structure (which in principle shows that CPO suppliers have significant negotiating power that is not used against buyers).

(132) In addition to the above factual mistake, the Commission further took note of the fact that Wilmar’s comment is not supported by any factual evidence. Lacking any new factual evidence, the Commission rejected this claim.

(133) Wilmar further claimed that the Commission failed to prove that the GOI induces CPO suppliers to provide CPO for less than adequate remuneration.

(134) The Commission observed that Wilmar did not provide any evidence supporting the claim that this is not the case. In this regard, the Commission recalls the claim made by the EBB concerning limited number of replies to the questionnaire provided by CPO suppliers. Absent cooperation by CPO suppliers, and on the basis of the elements contained in the provisional Regulation, the Commission considered that there is significant evidence showing that CPO suppliers have been entrusted or directed by the GOI to provide CPO for less than adequate remuneration in pursuit of the GOI’s policy objectives to support the development of the biodiesel industry.

(135) Moreover, the Commission observed that Wilmar’s claim contradicts the uncontested factual finding that virtually all domestic CPO purchases in Indonesia are carried out at the daily PTPN prices, adjusted to transport costs discussed in recital 168 of the provisional Regulation. If Wilmar’s claim was to be correct and CPO suppliers act totally independently from any government’s direction, such a perfect alignment of CPO prices could not be explained in a market which is fragmented.

(136) The Commission therefore rejected this claim.

(137) Wilmar also claimed that the Commission failed to prove entrustment or direction of CPO suppliers to provide CPO for less than adequate remuneration. Wilmar’s claim essentially rely on the fact that (1) PTPN is not a price setter, and therefore CPO is not provided for less than adequate remuneration and (2) CPO suppliers are not prevented to sell on the export market.

(138) The Commission already addressed and rejected these points in recitals 127 to 135. The Commission therefore considered that Willmar’s claim relies on incorrect facts and cannot be accepted. The evidence available in this investigation showed that PTPN acts as a price setter for CPO on the market and that the ability of CPO suppliers to export CPO is undermined by the measures adopted by the GOI.

(139) Similar claims have been made by the GOI, PT Intibenua Perkasatama and PT Musim Mas (‘Musim Mas Group’) and Permata. In its comments, the GOI claimed that CPO prices are determined by market forces and that buyers usually formulate their price ideas on international market prices.

(140) The Commission already discussed similar arguments in recitals 62 to 96, and found that they cannot be accepted. The same conclusion is maintained concerning the GOI’s claims. The Commission again observed that the GOI did not provide any new evidence to support its claim.

(141) The GOI claimed that the Commission failed to prove that there is a demonstrable link between the CPO producers’ behaviour and the GOI’s measures. In that regard, the Commission noted once again the finding of recital 168 of the provisional Regulation, recalled in recital 137. In the Commission’s view the fact that all independent CPO suppliers virtually always follow PTPN’s prices is an unequivocal proof of the existence of that link (and more so in a market which is fragmented in terms of the number of CPO suppliers as well as geographically/several islands). Even more so in a situation where domestic CPO prices do not reflect what would be an undistorted market price but for the GOI’s targeted measures.

(142) In its submission, the GOI also claimed that the Commission instructed the GOI and independent CPO suppliers to provide detailed information but did not verify this information. The GOI further claimed that the Commission totally disregarded this information in reaching its findings. Lastly, in this regard the GOI noted that the Commission applied Article 28 of the basic Regulation to the GOI for the GOI not further pursuing more such responses and for not getting more information from PTPN.

(143) In this regard, the Commission considered that this claim is factually incorrect. The Commission did analyse all the replies received by CPO suppliers. The Commission, however, noted that, despite all the reminders sent, all but one independent CPO supplier failed to provide an open version of their replies. In light of Article 29(3) of the basic Regulation, the Commission may disregard information which has been provided but for which a proper summary was not provided by the submitting party. Furthermore, the vast majority of the replies were incomplete and many of them did not contain information on profitability. The Commission therefore could not draw any conclusion from these replies. In fact, the lack of cooperation by the GOI as well as the CPO suppliers was a further indication that CPO suppliers are acting following the GOI’s command in support of the biodiesel producers.

(144) Similarly, the claim of the GOI that the Commission disregarded the reply of PTPN is unjustified. As explained before, the Commission unsuccessfully requested on several occasions the cooperation from PTPN. As stated in recitals 29 and 30 of the provisional Regulation, the Commission observed that PTPN, wholly owned by the GOI, did not respond to Appendix B to the GOI’s questionnaire within the stipulated deadline. The Commission therefore issued an Article 28 letter to the GOI, limited to the specific information that was not provided. As noted in recital 98 of the provisional Regulation, the GOI submitted a reply to the Appendix B for PTPN on 30 June 2019. This was long after the deadline for the submission of that information (14 March 2019) and after the verification visit at the GOI’s premises took place. The submission was therefore submitted long after the deadline, was not verifiable and the GOI has not acted to the best of its ability in accordance with Article 28 of the basic Regulation. In any event, the Commission used all the evidence provided by PTPN and which could be verified. Therefore, the Commission properly assessed the information provided by PTPN together with the other available facts about the CPO market in Indonesia.

(145) Following final disclosure, the GOI, the Permata Group and Wilmar claimed that the Commission erred in finding entrustment or direction of CPO suppliers because: (a) The export restraints are not designed to support the biodiesel industry and any impact on prices is a mere side-effect of the measures; (b) PTPN sets its prices via competitive tenders and is profitable; (c) Price alignment of CPO suppliers to PTPN does not show entrustment or direction; (d) CPO suppliers are rational operators on the market and the Commission failed to carry out verification of their responses; and, (e) The Commission failed to prove a demonstrable link between the action of the GOI, via PTPN, and the action of the CPO suppliers. According to the GOI, the limited market share of PTPN would not allow it to set market prices.

(146) The Commission firstly observed that the export levy is expressly designed to support the OPPF and that the OPPF is designed to support the palm oil industry at large but, as explained in recitals 76 and 77 of the provisional Regulation, de facto, only supports the biodiesel industry. Additionally, the Commission concluded that the GOI support of the biodiesel industry is achieved also with the provision of CPO for less than adequate remuneration. This objective is reached by the combined effect of various measures, including the export levy.

(147) The Commission therefore concluded that the imposition of the export levy has since its inception two distinct objectives: funding the OPPF and being part of a set of measure to depress domestic prices. In the Commission’s view, the GOI deliberately sought (and succeeded) to obtain that effect on the market and this is not a mere side-effect of a governmental policy.

(148) With regard to the claim that PTPN sets its prices via competitive tenders and that therefore that outcome should be regarded as a market price, the Commission reiterates that, as noted in recitals 91 to 99 and 126 of the provisional Regulation, the Commission had to rely on facts available in view of the lack of cooperation of CPO suppliers and PTPN. In their comments on the provisional Regulation no exporting producer provided any evidence concerning how they formulate their bids for CPO, other than vaguely claiming that they are based generally on ‘international market prices’. Yet, there was no direct evidence available on how CPO suppliers set their prices; rather, the facts show price alignment to the price set by PTPN.

(149) In this regard, in its comments to the definitive disclosure, Wilmar highlighted that the Commission services during the verification visit at its premises have asked the question how it reaches the decision on the price to offer at each PTPN’s tender. Wilmar further explained that the subsequent mission report does not indicate any missing information. In this respect the Commission observed that Wilmar does not contest that the information it had provided in that instance had been very vague. Additionally, the Commission observed that Wilmar did not consider it appropriate providing a more detailed explanation of this mechanism at any further stage of the investigation, despite this being repeatedly mentioned by the Commission.

(150) The Commission, lacking any verifiable evidence supporting this statement, rejected this claim. Rather than independently setting their prices in view of international prices, CPO suppliers follow the CPO prices effectively set by PTPN.

(151) With regard to the claim that PTPN is profitable, the Commission observed that, in addition to what was already explained in recitals 125 and 144, the GOI belatedly submitted PTPN’s 2018 audited accounts after the final disclosure. However, a translation was received only for part of these accounts. The 2018 accounts appear to show that PTPN was profitable in 2018. However, the Commission could not assess this because key parts of the accounts were not translated and because these accounts covered all products not just revenue from CPO sales. Furthermore, as explained above the data for both CPO sales and the company as a whole were submitted late and were therefore unverifiable. This is in addition to the fact that PTPN did not cooperate with the investigation. The Commission therefore concluded that the accuracy of the claim made could not be assessed and had to be rejected. With regard to the claim under (b) above, the Commission explained in recital 133 of the provisional Regulation that PTPN is in fact under no obligation to re-offer a higher price if the bids received are below the ‘price idea’ for that specific day. In fact, the Commission confirmed during the verification visit that PTPN regularly accepted offers below such a price. Additionally, the Commission observed that the GOI can and does influence PTPN’s decisions as regards the pricing policy of PTPN (18).

(152) With regard to the claim that the price alignment of CPO suppliers to the daily PTPN prices is an indication of the fact that the market is undistorted rather than an indication of entrustment or direction, the Commission observed that all independent CPO suppliers offered prices which are the same or lower prices compared to the PTPN’s price of that day. In the Commission’s view, this cannot be an indication of undistorted market dynamics: it is counterintuitive how in a competitive market all CPO suppliers would not sell for a price higher than the one set by a competitor (unless that competitor is effectively setting the maximum price for that good on the market and the government mandates or induces all the other players to respect that ceiling).

(153) With regard to the GOI’s claim that CPO producers are rational operators on the market as 70 % of the CPO is exported, the Commission observed that according to public sources, the domestic consumption of CPO amounts to 30 % of the production (19). This means that CPO producers entirely satisfy the domestic demand and, after having satisfied that demand, they resort to export. The fact that 70 % of the CPO production is exported therefore does not contradict the finding that CPO suppliers are deprived of a rational choice, but to the contrary. If Indonesian CPO suppliers would behave rationally, they would not satisfy the domestic demand, and they would export all, or a significantly larger proportion of, their production where they could achieve greater profit. Those potential extra-profits from exports are limited by the export restraints used by the GOI to induce CPO suppliers to sell domestically and satisfy the local needs. Hence, the fact that all the domestic demand is satisfied rather indicates that the GOI achieved its objective to source the domestic market at prices favourable to biodiesel producers.

(154) In its comments to the definitive disclosure, Wilmar further claimed that the fact that following the setting of the export levy at zero, the share of export of CPO did not increase is evidence that the Commission erred in concluding that the export levy is designed to keep CPO in the country and depress its price.

(155) In this respect, the Commission observed that the data provided by Wilmar indicated that the domestic consumption increased and that therefore it took a larger proportion of the total CPO production. This may support Wilmar’ claim if the GOI would have expressed its intention to end the export restraints system. However, as explained in recital 108 the intention of the GOI is not to end the export restraints mechanism. Rather, it is clear that the rate of export restraints system is simply at zero in reaction to external factors, i.e. the global drop of palm oil prices. All Indonesian producers are well aware that this level is merely temporary and are therefore continuing to give preference in satisfying the domestic demand first.

(156) Wilmar also provided price information in its reply, arguing that since the zeroing of the export levy, domestic CPO prices did not substantially increase. The Commission analysed that information and observed that it could not determine the source of the data used by Wilmar; therefore the Commission could not verify nor asses their accuracy. However the Commission, should it rely on those data, observed that, notwithstanding the temporary nature of the fact that the rate of the export levy is at zero, they show an alignment of domestic price to the export prices. Particularly, whereas during the investigation period the average difference between the two prices was around 50 USD/tonne, the data provided by Wilmar indicated that the domestic prices has risen close to the export prices and the difference is now of less than 20 USD/tonne. The fact that the domestic price have not substantially increased in absolute terms is simply due to the fact that world prices have dropped.

(157) In the Commission’s view, this supports its finding that the export restraints system is designed, inter alia, and together with the other measures, to depress domestic CPO prices.

(158) With regard to the GOI’s claim that the Commission did not verify the independent CPO suppliers’ responses, the Commission observes that this is a factually incorrect allegation. As already indicated in recital 143, the Commission duly analysed all the responses received but it observed that the vast majority of the replies were incomplete, many of them did not contain information on profitability and many did not provide open versions of their replies.

(159) In addition to this claim, the GOI submitted that the Commission’s assertions in the final disclosure, reported in recital 143, are incorrect as it could not find track of the reminders on the open file. With reference to this claim, the Commission observed that those reminders are part of the limited file and they can be found on the list of limited documents available to interested parties. The Commission nonetheless provided a list of the relevant save numbers to the GOI during a hearing held on 16 October 2019. The Commission also observed that that the questionnaires to independent CPO suppliers were part of the questionnaire addressed to the GOI, and therefore the responsibility to coordinate, collect and ensure the timely sending of complete replies lied entirely on the GOI.

(160) With reference to the claim under (e) above, the Commission explained in recitals (124) to (143) of the provisional Regulation how the GOI, via PTPN, acts as a price setter on the Indonesian domestic market and how all independent CPO suppliers follow those price indications. In its comment to the definitive disclosure, the GOI stated that in light of PTPN’s limited market share that result is unlikely. The Commission however observed that the GOI failed to provide any factual evidence whatsoever to support its statement and to contradict the Commission’s finding.

(161) In light of the above, the Commission rejected the GOI’s and exporting producers’ claims and confirmed its finding of entrustment and direction.

3.2.3. Failure to prove income or price support under Article 3(1)(b) of the basic Regulation

(162) Following provisional disclosure the GOI and the exporting producers claimed that the Commission failed to prove the existence of income and price support in favour of biodiesel producers according to the required standard set out by the WTO case-law.

(163) On this point, the Commission observed that neither the GOI nor the exporting producers provided new information or evidence to substantiate a claim of lack of income or price support. The claims raised in this respect merely disagree with the interpretation of the case-law followed by the Commission. The Commission considered that the analysis carried out in section 3.3.3.7 of the provisional Regulation satisfies the standard of proof laid down by the basic Regulation, the SCM agreement and the WTO case law.

(164) Lacking any new factual element which could trigger a reassessment of its finding, the Commission confirmed the conclusion reached in section 3.3.3.7 of the provisional Regulation.

(165) Following definitive disclosure, the GOI submitted that the Commission erred in finding income and price support because that requires the existence of a measure that guarantees a certain result, and not any measure having an incidental effect on prices.

(166) In that regard, the Commission already explained in recitals 153 and 160 that the set of measure have the objective of regulating and depressing domestic prices, and that is not simply a side-effect of the GOI’s policy. Additionally, the Commission observed that neither the GOI nor the exporting producers provided new information or evidence to substantiate a claim of lack of income or price support.

(167) Wilmar claimed that the Commission failed to consider its claims in response to the provisional disclosure and urged the Commission to do so.

(168) Contrary to Wilmar’ allegation, the Commission analysed those allegations and, as indicated in recital 163, it could not find any new factual element. Rather, Wilmar explains why it disagrees with the Commission’ interpretation of the WTO case law and of the facts of the case. In those comments, Wilmar also discusses its view of the correct counterfactual.

(169) For the sake of clarity, the Commission restated that it disagreed with Wilmar’s interpretation of the WTO case law and the facts of the case as laid down in section III.B.3 of the Comments to the Provisional Regulation and entirely confirmed the conclusion reached in section 3.3.3.7 of the provisional Regulation.

3.2.4. Failure to prove existence of a benefit: error in identifying the appropriate benchmark

(170) In the provisional Regulation, the Commission found that the FOB CPO export prices from Indonesia to the rest of the world as found in the Indonesia Export Statistics are an appropriate benchmark as they are set according to free market principles, compete with prices of other products in foreign markets, reflect prevailing market conditions in Indonesia, and are not distorted by government intervention. Additionally, the Commission considered that the benchmark used is the closest proxy to what an undistorted Indonesian domestic price would be absent the GOI’s intervention. The Commission also found that the FOB prices used as a benchmark are in line with international prices (such as, for example, CIF Rotterdam).

(171) The Commission therefore calculated the amount of countervailable subsidy for each exporting producer in terms of the benefit conferred on the recipient found to exist during the investigation period. The Commission assessed the benefit as being the sum of the differences between the prices paid for domestically purchased CPO and the benchmark price of CPO calculated per month of the investigation period.

(172) The GOI, Wilmar and Permata Group claimed that the Commission erred (1) in considering that benchmark as appropriate and, (2) in calculating the total benefit. The GOI, Wilmar and Permata Group claim that this is because the FOB export price includes the export levy and is therefore distorted. The EBB submitted a very similar claim as well.

(173) The Commission observed that the claim that the export price is distorted essentially tries to conceptually reverse the reasoning of the case. While the Commission considered that the domestic CPO prices are artificially low, the exporters claim that it is the export prices (roughly in line with international prices) that are too high. In other words, the exporters claim that the export levy makes export prices too high. However, it is the domestic price that is distorted because of the export levy, among other things. Finally, the GOI itself claimed that the export levy is not included in the export price used by the Commission in its calculations (20). The Commission noted this claim of the GOI. However, it considered that the effects of the export levy are factored in the FOB price. The Commission in fact considered that the seller takes into account the obligation to pay the levy when setting the export price, which is then communicated to the GOI’s authorities for statistical purposes.

(174) Moreover, as set out in recital 198 of the provisional Regulation, the Commission considered the monthly FOB export price, reported in the Indonesian statistics, as the most suitable benchmark. The Commission considered this benchmark as suitable for the individual purchase transactions. The Commission found that the FOB incoterm of the benchmark price and the incoterms of domestic purchase transactions made by the exporting producers were comparable. The Commission did not receive any comments in this respect by interested parties.

(175) In addition to the above, Wilmar claimed that the Commission erred in calculating the amount of benefit received by the former as it should have deducted from the calculation of the benefit the amounts by which the CPO purchase price exceeds the benchmark. In this respect, the Commission noted that it had only taken into account the transactions for which a benefit was conferred (in other words, where the price paid by the exporting producers was below the benchmark). These are the transactions where the programme in question results in granting benefits to exporting producers. So it would not make sense to deduct transactions where no advantage was granted since they were market conform. In this sense, the Commission observed that the WTO panel in United States — Definitive Anti-Dumping and Countervailing Duties on Certain Products from China (21), examining how the USDOC had determined the amount of benefit conferred thorough the subsidy at issue referred to as the provision of ‘rubber’ for less than adequate remuneration (22), noted that the alleged subsidies ‘must be analysed in relation to a particular period to ultimately arrive at an overall amount of subsidisation of the investigated product’ (23) and that ‘Article 14(d) of the SCM Agreement contains no reference to any notion of offsetting, or “negative benefits” or of averaging across the period of investigation, for a particular good’ (24). The comparison is a comparison of individual purchase transactions with a benchmark individual for that purchase transaction. The Commission performed a transaction to transaction comparison to establish whether there was a benefit and the amount of that benefit. The total of the benefits found per transaction is the amount of subsidy. Therefore, this claim is dismissed.

(176) Following final disclosure, the GOI also claimed that the Commission failed to prove the existence of a benefit because (1) it is illogical to find a benefit in the form of export restraints in a competitive financial market, and (2) domestic CPO prices follow competitive market dynamics.

(177) In this respect, the Commission would like to point out once again that the benefit in this case is in the form of provision of CPO for less than adequate remuneration. The GOI’s first claim is therefore rejected.

(178) With regard to the GOI’s claim that domestic CPO prices follow competitive and undistorted market dynamics, the Commission refers to the analysis carried out, and in particular in recital 151.

(179) The Commission therefore maintained its finding that this scheme grants a benefit to the exporting producers.

(180) The GOI also claimed that the Commission identified the incorrect benchmark essentially because the one it used is inclusive of the export levy and that it should deduct the export levy from the benchmark.

(181) In this respect the Commission observed a contradiction between this statement and the reply of the GOI to the deficiency letter of 14 March 2019. In that reply, the GOI stated that: ‘The GOI confirms that export statistics to the EU only cover biodiesel produced in Indonesia. The reported value of the export is FOB and export tax/levy is not included’. The Commission additionally observed that the GOI did not provide any additional factual element to support its statement. As explained in recital 173, the Commission considered that the reported FOB export price de facto includes the effects of the export levy.

(182) It was claimed by Wilmar that the benchmark used to calculate the benefit was excessive because an ‘out-of-country’ benchmark had been used. However, in determining the most accurate and appropriate benchmark to be used it should be recalled that the Commission did not use ‘out-of-country’ benchmarks such as those available in Malaysia or Europe such as CIF Rotterdam. The Indonesian export prices were used because they are Indonesian (and in this sense are in-country prices) and because they represent a reliable market basis for comparison purposes. Therefore this claim was rejected.

(183) The Commission therefore confirmed the conclusion reached in recital 172.

3.2.5. Specificity

(184) Following definitive disclosure, the GOI claimed that the Commission failed to prove specificity of the programme. According to the GOI, a subsidy which is specific if it refers to a single industry only.

(185) The Commission disagreed with this claim. The Commission noted that the Panel in US — Upland Cotton explained that: ‘According to the text of Article 2 of the SCM Agreement, a subsidy is “specifi c” if it is specific to an enterprise or industry or group of enterprises or industries (referred to in the SCM Agreement as “certain enterprise s”) within the jurisdiction of the granting authority.(…)’. The Panel further explained that ‘(…) “Specificit y” extends to a group of industries because the words “certain enterpris e” are defined broadly in the opening terms of Article 2.1 , as an enterprise or industry or group of enterprises or industries.’ (25)

(186) The Appellate Body in US — Anti-Dumping and Countervailing Duties (China) considered the meaning of ‘certain enterprises’ in Article 2: ‘Furthermore, a subsidy is specific under Article 2.1 (a) of the SCM Agreement when the explicit limitation reserves access to that subsidy to “certain enterprises”. The chapeau of Article 2.1 establishes that the term “certain enterprises” refers to “an enterprise or industry or group of enterprises or industries”. We first note that the word “certain” is defined as “[k]nown and particularized but not explicitly identified: (with sing. noun) a particular, (with pl. noun) some particular, some definit e”. The word “group”, in turn, is commonly defined as “[a] number of people or things regarded as forming a unity or whole on the grounds of some mutual or common relation or purpose, or classed together because of a degree of similarity”. Turning to the nouns qualified by “certain” and “group”, we see that “enterprise” may be defined as “[a] business firm, a company”, whereas “industry” signifies “[a] particular form or branch of productive labour; a trade, a manufacture”. We note that the panel in US — Upland Cotton considered that “an industry, or group of ‘industries’, may be generally referred to by the type of products they produce”; that “the concept of an “industry” relates to producers of certain products”; and that the “breadth of this concept of ‘industry” may depend on several factors in a given case”. The above suggests that the term “certain enterprises” refers to a single enterprise or industry or a class of enterprises or industries that are known and particularized. We nonetheless agree with China that this concept involves “a certain amount of indeterminacy at the edges”, and with the panel in US — Upland Cotton that any determination of whether a number of enterprises or industries constitute “certain enterprises” can only be made on a case -by-case basis’. (26)

(187) The Commission therefore noted that the WTO case law does not require that a subsidy refers to a single industry to be specific, rather it can also refer to ‘a class of enterprises or industries that are known and particularized’. In this case, the Commission in recital 202 of the provisional Regulation concluded that the set of measures are specific because they benefit the enterprises active in the palm oil value chain. Hence, the Commission — in line with the WTO case law — concluded that the set of measure are specific because they refer to ‘a class of enterprises or industries that are known and particularized’. The GOI’s claim is therefore rejected.

3.3. Government support to the biodiesel industry through the exemption of import duties on imported machinery into bonded zones

(188) As mentioned in recital 237 of the provisional Regulation, the Commission calculated the benefit to the exporting producers deriving from the exemption of import duty on imported machinery as the total amount of unpaid duty, allocated to the investigation period on the basis of the useful life of the underlying assets. Exporting producers claimed that when calculating the benefits obtained on account of exemption of import duties on imported machinery the Commission should have allocated the amounts received over the total turnover of the respective companies and not only the turnover of the product concerned. The exporting producers explained that this is because the list of machines imported duty free does not only include machines used for the production of biodiesel, but also for other products.

(189) In this respect, already in the questionnaire to exporting producers the Commission requested the companies to provide the list of machines and indicate their use. The Commission noted that none of the exporting producers raised possible dual use of specific machines before the verification visit, at the time when it would be possible to verify the information. Since it was not possible to verify this allegation, the claim was therefore rejected.

(190) Regarding the imports of machinery to bonded zones, following the publication of the provisional Regulation, the Commission received comments from the EBB on partial cooperation of Wilmar in this respect. The EBB recalled the fact that Wilmar did not reveal the amount of subsidies received under the bonded zone subsidy scheme. Further, the EBB noted that the provisional duty imposed on Wilmar is not the highest duty rate among the provisional duties imposed for this scheme.

(191) In this respect, the EU Commission confirmed, that due to partial lack of cooperation with regard to data on bonded zones, the Commission in this regard has applied to Wilmar the facts available in accordance with Article 28 of the basic Regulation.

(192) Following definitive disclosure, PT Ciliandra Perkasa claimed that the Commission erred in rejecting its claim that the Commission should have allocated the amounts received over the total turnover of the respective companies and not only the turnover of the product concerned. According to PT Ciliandra Perkasa, this is because the Commission could have guessed from the list provided whether each individual machine is used for biodiesel only or has a dual use.

(193) The Commission noted in recital 189 that none of the exporting producers, including PT Ciliandra Perkasa, raised possible dual use of specific machines before the verification visit, at the time when it would be possible to verify the information. Since it was not possible to verify this allegation, the claim was rejected.

3.4. General comment on the methodology used for the subsidy calculations

(194) Following provisional disclosure, Wilmar claimed that the Commission erred in calculating the subsidy amounts as it did so trough turnover allocations. Wilmar alleges that, pursuant to Article 7(1) of the basic Regulation, the Commission should have calculated the subsidy amount per unit of the subsidised product instead of for each programme.

(195) The Commission noted that no subsidy was granted by reference to the quantities manufactured, produced, exported or transported. Therefore, the amount of the total subsidy was allocated over the relevant sales turnover of the companies of the Wilmar group in line with Article 7(2) of the basic Regulation which reads as follows: ‘Where the subsidy is not granted by reference to the quantities manufactured, produced, exported or transported, the amount of countervailable subsidy shall be determined by allocating the value of the total subsidy, as appropriate, over the level of production, sales or exports of the products concerned during the investigation period for subsidisation’.

(196) Since none of these subsidies are granted by reference to the quantities manufactured, produced, exported or transported, the relevant sales turnover of the company is the most appropriate denominator. In that respect, it should be noted that the relevant turnover has been determined on a basis which ensures that it reflects as closely as possible the sales value of the products sold by the recipient company. Any other proposed methodology in calculating the a