Commission Regulation (EC) No 1556/98 of 17 July 1998 imposing a provisional countervailing duty on imports of stainless steel bars originating in India and amending Regulation (EC) No 1084/98 imposing a provisional anti-dumping duty on imports of stainless steel bars originating in India
Date: 1998-07-17
Institutions: European Commission
Subjects: India, anti-dumping duty, bar, import, originating product, steel

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COMMISSION REGULATION (EC) No 1556/98

of 17 July 1998

imposing a provisional countervailing duty on imports of stainless steel bars
originating in India and amending Regulation (EC) No 1084/98 imposing a
provisional anti-dumping duty on imports of stainless steel bars originating in
India

THE COMMISSION OF THE EUROPEAN COMMUNITIES,

Having regard to the Treaty establishing the European
Community,

Having regard to Council Regulation (EC) No 2026/97 of
6 October 1997 on protection against subsidised imports
from countries
the European
not members
Community (1), and in particular Article 12 thereof,

of

Having regard to Council Regulation (EC) No 384/96 of
22 December 1995 on protection against dumped imports
from countries
the European
Community (2), as last amended by Regulation (EC) No
905/98 (3), and in particular Article 7 thereof,

not members

of

their views known in writing. All parties who so
requested within the time limits set in the notice of
initiation were granted a hearing.

(4)

(5)

The Commission sent questionnaires to all parties
known to be concerned and received replies from
the Government of India and a number of com-
panies in the Community and India.

The Commission sought and verified all the in-
formation it deemed necessary for the purpose of a
preliminary determination of
subsidisation and
injury, and carried out investigations at the prem-
ises of the following companies:

After consulting the Advisory Committee,

(a) Community producers

Whereas:

(1)

(2)

(3)

A. PROCEDURE

In October 1997 the Commission announced by a
notice (hereinafter referred to as ‘notice of initia-
tion') published in the Official Journal of the
European Communities (4) the initiation of an anti-
subsidy proceeding with regard to imports into the
Community of
(hereinafter
steel bars
stainless
‘SSB') originating in India and
referred to as
commenced an investigation.

producers

The proceeding was initiated as a result of a
complaint lodged by the European Confederation
of Iron and Steel Industries (Eurofer) on behalf of
Community
a major
proportion of the Community production of SSB.
The complaint contained evidence of subsidisation
of the said product, and of material injury resulting
to
therefrom, which was considered sufficient
justify the initiation of a proceeding.

representing

exporting producers

The Commission officially advised the Community
producers,
and importers
known to be concerned, the representatives of the
exporting country and the complainant of
the
initiation of
it gave the parties
concerned the opportunity to make their views
known in writing and to request a hearing.

the proceeding;

The Government of India, a number of exporting
producers in India as well as some producers,
importers and suppliers in the Community made

(1) OJ L 288, 21. 10. 1997, p. 1.
(2) OJ L 56, 6. 3. 1996, p. 1.
(3) OJ L 128, 30. 4. 1998, p. 18.
(4) OJ C 328, 30. 10. 1997, p. 16.

(cid:190) Cogne Acciai Speciali Srl, Aosta, Italy,

(cid:190) Krupp Edelstahlprofile GmbH,

Siegen,

Germany,

(cid:190) Rodacciai Spa, Bosisio Parrini, Italy,

(cid:190) Sprint Metal Edelstahlziehereien GmbH,

Hemer, Germany,

(cid:190) Trafilerie Bedini Srl, Peschiera Borromeo,

Italy,

(cid:190) Ugine-Savoie SA, Ugine, France.

During the verification visit to Rodacciai Spa
the company withdrew its cooperation and
consequently the information provided by this
company could not be taken into account for
the investigation.

(b) Government of India

(cid:190) Ministry of Commerce, New Delhi,

(cid:190) Undersecretariat for Customs, New Delhi,

(cid:190) Ministry of Finance, New Delhi.

(c) Exporting producers in India

(cid:190) Bhansali Bright Bars Pvt Ltd, Mumbai,

(cid:190) Facor (Ferro Alloys Corp. Ltd), Nagpur,

(cid:190) Grand Foundry Ltd, Mumbai,

(cid:190) Isibars Ltd, Mumbai,

(cid:190) Mukand Ltd, Mumbai,

(cid:190) Panchmahal Steel Ltd, Baroda,

(cid:190) Raajratna Metal Industries Ltd, Ahmedabad,

(cid:190) Venus Wire Industries Ltd, Mumbai,

(cid:190) Viraj Alloys Ltd, Mumbai.

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(d) Importers

in the Community

related to

exporting Indian producers

(cid:190) Isibars GmbH, D(cid:129)sseldorf, Germany,

(cid:190) Mukand International Ltd, London, United

Kingdom.

(e) Importers in the Community not related to

exporting Indian producers

(cid:190) Thyssen

Schulte GmbH, Dortmund,

Germany,

(cid:190) Ibero Edelstahlhandel & Co KG, M(cid:129)lheim,

Germany,

(cid:190) Metaalcompagnie ‘Brabant', Valkenswaard,

Netherlands.

In the course of the investigation, it was found
that Ibero Edelstahlhandel and Thyssen Schulte
were, in fact, related to Community producers.

The investigation of
subsidisation covered the
period 1 October 1996 to 30 June 1997 (hereinafter
referred to as ‘the investigation period'). The exam-
ination of injury covered the period 1994 to the
end of the investigation period.

On 30 August 1997 the Commission initiated an
anti-dumping investigation concerning imports of
the same product originating in India (1). This
investigation is still in progress; provisional anti-
dumping duties have been imposed by means of
Commission Regulation (EC) No 1084/98 (2).

B. PRODUCT UNDER CONSIDERATION AND

LIKE PRODUCT

1. Product under consideration

(13)

The product concerned is stainless steel bars and
rods, not further worked than cold-formed or cold-
finished, containing by weight 2,5 % or more of
nickel, of circular cross-section as well as of other
cross-sections, currently classifiable within CN
codes 7222 20 11, 7222 20 21, 7222 20 31, and
7222 20 81.

Stainless steel
is characterised by a significant
content of nickel, chromium and in some instances
molybdenum. These alloys protect stainless steel
against corrosion. SSB are used by a variety of
industrial users, such as the automobile, building,
industries.
mechanical engineering and chemical

and are distributed via the same distribution chan-
nels. They are consequently considered as forming
one single category of product for the purposes of
this investigation.

2. Like product

(11)

the

investigation established

SSB
that
The
produced in India
and sold domestically or
exported to the Community and the SSB produced
and sold in the Community by the complainant
Community producers had effectively identical
physical characteristics and uses and were thus like
products within the meaning of Article 1(5) of
Regulation (EC) No 2026/97 (hereinafter referred
to as ‘the Basic Regulation').

C. SUBSIDIES

1. Introduction

(12) On the basis of the information contained in the
complaint and the replies to the Commission’s
questionnaire,
the Commission investigated the
following five schemes, which allegedly involve the
granting of export subsidies:

(cid:190) Passbook Scheme,

(cid:190) Duty Entitlement Passbook Scheme,

(cid:190) Export Promotion Capital Goods Scheme,

(cid:190) Export Processing Zones/Export Oriented

Units,

(cid:190) Income Tax Scheme.

The first four schemes are based on the Foreign
Trade (Development and Regulation) Act 1992
(effective from 7 August 1992) which repealed the
Imports and Exports Control Act of 1947. The
Foreign Trade Act authorises the Government of
India (hereinafter referred to as the ‘GOI') to issue
notifications regarding export and import policy.
These are summarised in ‘Export and Import
Policy' documents which are issued every five years
and updated every year. Two Export and Import
Policy documents are relevant to the investigation
period of this case, i.e. the five-year plans relating
to the years 1992 to 1997 and 1997 to 2002.

The last scheme, the Income Tax Scheme, is based
on the Income Tax Act of 1961 which is amended
yearly by the Finance Act.

(10)

There exists a wide variety of types of SSB differen-
tiated by alloy content, shape, tolerance and dia-
meter. Despite the existence of these types of SSB,
they all fall under the broad definition of SSB
because they have the same basic physical, chem-
ical and technical characteristics and the same uses

(1) OJ C 264, 30. 8. 1997, p. 2.
(2) OJ L 155, 29. 5. 1998, p. 3.

(14)

The declared objectives of India’s current Export
and Import Policy are:

(cid:190) to accelerate the country’s

transition to a
globally-oriented vibrant economy with a view
to deriving maximum benefits from expanding
global market opportunities,

(6)

(7)

(8)

(9)

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18. 7. 98

(cid:190) to stimulate sustained economic growth by
providing access
raw materials,
intermediates, consumables and capital goods
required for augmenting production,

to essential

(cid:190) to enhance the technological strength and effi-
ciency of
industry and
Indian agriculture,
services, thereby improving their competitive
strength while generating new employment
opportunities, and encourage the attainment of
internationally accepted standards of quality,

(cid:190) to provide consumers with good quality prod-

ucts at reasonable prices.

(15)

The Commission examined these five schemes in
the light of the policies set out in the relevant
‘Export and Import Policy' plans and in the
Income Tax Act of 1961 as amended.

(20)

2. Passbook Scheme (PBS)

(16) One instrument under the Export and Import
Policy involving export-related assistance is the
PBS which entered into force on 30 May 1995.

(a) Eligibility

(17)

i.e.

The PBS is available to certain categories of export-
ers,
those which manufacture in India and
subsequently export (‘manufacturer-exporters') and
exporters, whether manufacturers or only traders,
granted an ‘Export House/Trading House/Star
Trading House/SuperStar Trading House certific-
ate'. The latter category of exporters, which is
defined in the Export and Import Policy document,
has to provide in particular proof of prior export
performance.

(b) Practical implementation

(18) Any eligible exporter can apply for a Passbook.
This takes the form of a book in which credit and
debit amounts of duty are entered. It is issued
automatically if the company is a recognised manu-
facturer-exporter or an approved Export/Trading
House.

(19) Upon the export of finished goods, the exporter is
eligible to claim credit which can be used to pay
customs duties on subsequent
imports. Various
elements are taken into consideration in calcu-
lating the amount of credit to be granted in accord-
ance with ‘Standard Input/Output norms' which
are issued by the GOI for exported products.
Standard Input/Output norms set out quantities of
required to
normally imported raw materials
produce one unit of
the finished product. The
norms are established by the Special Advance
Licensing Committee on the basis of a technical

Indian industry producing the

analysis of the production process and global stat-
istical
information. By applying the Standard
Input/Output norms, the credit is granted up to an
amount corresponding to the basic customs duty
payable on the normally imported inputs used by
exported
the
product
is the
in question. One other element
‘minimum value addition' (MVA). The MVA is the
minimum value which the Indian producer must
through indigenously sourced inputs/
add (i.e.
labour costs) to the value of imported inputs in
producing the finished goods. The MVA for exports
of the products concerned is fixed at 33 % by the
Indian authorities.

The credit granted is entered in the Passbook and
is available to be offset against customs duties due
on future imports of any goods (e.g. raw materials,
capital goods, etc.) except those contained in the
‘Negative List of Imports' as laid out in the Export
and Import Policy. This List sets out goods which
either may not be imported or which may only be
imported after the GOI has issued a special licence
to the importer. The imported goods need not have
any relation to the actual production of
the
exporter and may be sold on the Indian market.

(21)

Passbook credits are not transferable. The Passbook
is valid for a period of two years from the date of
issue. Any credit at the end of the two-year period
is allowed to be utilised within a period of 12
months thereafter. At the end of the third year, any
unutilised credit lapses. Within this general time-
table there is no time limit for claims for credit to
be made for a particular export transaction.

(22) When all credits in the Passbook have been used,
the Passbook is closed and the Passbook holder has
to pay a fee to the relevant authority.

(23)

The GOI has stated in its reply to the question-
naire in relation to the PBS that:

‘Under this scheme, the exporter retrieves import
charges on the exported product, whereas there is
no remission of import charges on the like product
destined for consumption within the exporting
country. In this respect the Scheme is in accord-
ance with Council Regulation (EC) No 3284/94
(the anti-subsidy Regulation)'.

(24)

In response to this point, it should be noted that
there is no difference on this point between this
latter Regulation, which has since been repealed,
and its replacement, the Basic Regulation. Article
2(1)(ii) of the Basic Regulation provides that the
exemption of an exported product from duties/
charges shall not be deemed to be a subsidy
provided that it is granted in accordance with the

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investigating authorities,

import charges in excess of

provisions of Annexes I to III to the Basic Regula-
tion. Item (i) of Annex I (the Illustrative List of
Export Subsidies) specifies that the remission or
drawback of
those
levied on imported inputs that are consumed in the
production of the exported product constitutes an
export subsidy. Furthermore, Annex II to the Basic
Regulation requires
in
determining whether inputs are consumed in the
the
production process,
government of the exporting country has in place a
system or procedure to confirm which inputs are
consumed in the production process of
the
imported product. In this case, no such system
the benefit granted in India to
exists. In fact,
exporters of the products concerned in the form of
Passbook credits is automatically calculated on the
basis of the Standard Input/Output norms inde-
pendently of whether inputs have been imported,
duty has been paid on them or whether the inputs
were actually used for export production.

to establish whether

actual

import

Furthermore, the exporter is under no obligation to
either
inputs or consume the
imported goods in the production process under
the PBS. What happens in the PBS, in effect, is that
upon export of a finished product, an exporter is
granted an amount of credit based on the amount
of customs duty which is deemed to have been paid
on normally imported inputs used in producing
the finished product. This credit amount can be
used to offset customs duty due on future imports
of any product. A benefit accrues to the exporter in
the form of unpaid customs duty on imports of any
product (whether raw materials or capital goods).
This scheme therefore allows an exporter to import
goods without paying customs duty once it has
previously exported some goods. Hence, the PBS is
not
remission/drawback scheme within the
meaning of item (i) of Annex I or Annex II to the
Basic Regulation.

a

(26)

(27)

the exported product within the meaning of item
(i) of Annex I and Annexes II and III to the Basic
Regulation. Annex II(II)(5) and Annex III(II)(3) of
that Regulation provide that where it is determined
that the government of the exporting country does
not have such a system in place, a further exam-
ination by the exporting country based on actual
inputs involved, or actual transactions, respectively,
will normally need to be carried out in the context
an excess payment
of determining whether
occurred. The GOI did not carry out such an exam-
ination. Hence, the Commission did not examine
whether there was in fact an excess drawback of
import charges on inputs consumed in the produc-
tion of the exported product.

The scheme constitutes a subsidy as the financial
contribution by the GOI in the form of duties
forgone on imports confers a benefit upon the
Passbook holder who can import goods duty free
using credits earned on exports. It is a subsidy
contingent in law upon export performance and is
therefore deemed to be specific pursuant to Article
3(4)(a) of the Basic Regulation. In addition, the
MVA requirement (see recital 19) is considered to
require the use of domestic over imported goods.
In this regard, the PBS is a specific subsidy within
the meaning of Article 3(4)(b) of the Basic Regula-
tion.

In early 1997, the GOI announced that the PBS
was effectively terminated and credit claims could
no longer be made for export transactions taking
place after 31 March 1997. An exporter may,
however, continue to use a Passbook which has
already been issued, for a period of three years after
the date of issue. Additionally, there is no time
limit within which claims for credit must be made
for export transactions made before 31 March 1997.
While the scheme in that form has technically
been terminated, exporters can continue to benefit
from this scheme by importing goods,
free of
customs duties, until
credits have been
exhausted or until 31 March 2000 at the latest. In
the
these circumstances,
scheme can be countervailed.

is considered that

all

it

(c) Conclusion on PBS

(25)

The PBS is not a permitted remission/drawback or
substitution drawback scheme within the provi-
sions of the Basic Regulation since the Passbook
credit is not calculated in relation to inputs actually
to be consumed in the production process. Further-
more, the exporter is under no obligation to import
goods free of duty which must be consumed in the
production process.

it were assumed that

In any case, even if
the
scheme in question constituted a remission/draw-
back or substitution drawback scheme, there is no
system or procedure in place to confirm which
inputs are consumed in the production process of

(d) Calculation of the subsidy amount

(28)

The benefit to the exporters has been calculated on
the basis of the amount of customs duty normally
due on imports made during the investigation
period but which remained unpaid under the PBS.
In order to establish the full benefit to the recipient
under this scheme, this amount has been adjusted
by adding interest during the investigation period.

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Since the benefits from import duty exemptions
are obtained regularly during the investigation
period, they are equivalent to a series of grants. It is
normal practice to reflect the benefit to the re-
cipient of one-time grants by adding the annual
commercial interest to the nominal amount of the
grant, on the assumption that the grant is con-
sidered to have been made on the first day of the
investigation period. However, in the present case,
it is clear that individual grants can be made at any
time between the first and the last day of
the
investigation period. Consequently,
instead of
adding annual interest to the whole amount, it is
considered appropriate to assume that an average
grant would have been received at the mid-point of
the investigation period, and therefore the interest
should cover a period of six months, equivalent to
the annual commercial rate during the
half of
i.e. 7,29 %. This
investigation period in India,
amount (i.e. unpaid customs duty plus interest) has
been allocated over total exports during the invest-
igation period.

Nine companies benefited from this
scheme
during the investigation period and obtained
subsidies of between 0,2 and 84,5. Where compan-
ies claimed deductions linked to the payment of
fees for obtaining the PBS, these were granted. One
of the companies claimed an additional deduction
for costs incurred to obtain the subsidy; these costs
consisted of consultant
for handling PBS
applications. Pursuant to Article 7(1)(a) of the Basic
Regulation a deduction can be granted for any cost
necessarily incurred in order to obtain the subsidy.
Since companies can obtain the benefit without the
need to have recourse to external consultants the
deduction claim is not justifiable.

fees

Facor (Ferro Alloys Corp. Ltd) provided incomplete
verifiable information relating to this scheme. In
accordance with the provisions of Article 28(1) of
the Basic Regulation, provisional findings relating
to subsidies received by this company under the
PBS have been made on the basis of the facts
available. In view of the absence of other reliable
information from independent sources and in order
to avoid rewarding non-cooperation, it was con-
sidered appropriate to apply the highest rate of
benefit under the PBS established for other co-
operating exporters to this company, i.e. 84,5 %.

3. Duty

Entitlement

Passbook

Scheme

(DEPB)

(29) Another

instrument under

Import
Policy involving export related assistance is the
DEPB which became effective on 7 April 1997.

the Export

The DEPB constitutes the successor to the PBS
which was terminated on 31 March 1997. The
DEPB is of two types:

(cid:190) DEPB on pre-export basis,

(cid:190) DEPB on post-export basis.

(a) DEPB on pre-export basis

(30)

The DEPB on pre-export basis is available to
manufacturer-exporters (i.e. every manufacturer in
(i.e.
India who exports) or merchant-exporters
traders) linked with manufacturers. To be eligible
the company must have
under
exported during a three-year period prior
to
submitting a claim for credit.

scheme,

this

However, no producer/exporter of
the product
concerned applied for or made use of the DEPB
scheme on a pre-export basis. There is therefore no
need for the Commission to assess this part of the
scheme in the context of the investigation.

(b) Eligibility for DEPB on post-export basis

(31)

The DEPB on post-export basis is virtually ident-
ical to the PBS described above. It is available to
manufacturer-exporters (i.e. every manufacturer in
India who exports) or merchant-exporters
(i.e.
traders).

(c) Practical implementation of DEPB post-export

basis

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

DEPB on post-export basis allows for the use of
such credits for any subsequent imports (e.g. raw
materials or capital goods) not on the Negative List
of Imports. Such imported goods can be sold on
the domestic market (subject to sales tax) or used
otherwise.

DEPB credits are freely transferable. The DEPB
licence is valid for a period of 12 months from the
date of granting of the licence.

(33) When all credits have been used, the company has

to pay a fee to the relevant authority.

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(34)

(d) Conclusion on DEPB on post-export basis

This scheme is clearly contingent upon export
performance. When a company exports goods, it is
granted a credit which can be used to offset
amounts of customs duties due on future imports
of any goods (whether raw materials or capital
goods). Like the PBS, it is not a permitted drawback
or substitution drawback scheme for
the same
reasons as stated above in recital 25. The scheme
constitutes a subsidy as the financial contribution
by the GOI in the form of duties forgone on
imports confers a benefit upon a company which
can import goods free of customs duty. It is a
subsidy
export
in
performance and is therefore deemed to be specific
pursuant to Article 3(4)(a) of the Basic Regulation.

contingent

upon

law

(e) Calculation of the subsidy amount for DEPB

post-export basis

(35)

Some of the companies applied for credits under
the DEPB on a post-export basis during the invest-
igation period. However, in view of the fact no use
was made of the credits during the investigation
period no countervailable benefit has accrued to
them. In this respect no subsidy margin has been
established with respect to this scheme.

the export obligation, goods
In order to meet
exported must have been produced using the
imported capital goods.

(39) An application fee is payable to obtain a licence.

(c) Conclusion on EPCGS

(40)

(41)

The EPCGS is a countervailable subsidy as the
payment by an exporter of a reduced or zero rate of
duty constitutes a financial contribution by the
GOI, revenue otherwise due is foregone and a
benefit is conferred on the recipient by lowering
the duties payable or fully exempting him from
paying the import duties.

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

4. Export Promotion Capital Goods Scheme

(42)

(EPCGS)

(36) Another

instrument under

Import
Policy involving export related assistance is the
EPCGS introduced on 1 April 1990 and amended
on 5 June 1995.

the Export

(a) Eligibility

(37)

The EPCGS is available to manufacturer/exporters
(i.e. every manufacturer in India who exports) or
traders). Since 1 April
merchant/exporters
1997, manufacturers
linked with merchant-
exporters can also benefit from the scheme.

(i.e.

(b) Practical implementation

(38)

from the scheme, a company must
To benefit
provide to the relevant authorities details of the
type and value of capital goods which are to be
imported. Depending on the level of export
commitment which the company is prepared to
undertake, the company will be allowed to import
capital goods at either a zero rate of duty or a
reduced rate. A licence authorising the import at
preferential rates is issued automatically.

(d) Calculation of the subsidy amount

The benefit to the exporters has been calculated on
the basis of the amount of unpaid customs duty
due on imported capital goods by spreading this
amount across a period which reflects the normal
depreciation of such capital goods in the industry
of the product concerned. This period has been
established by using the weighted average (on the
the products
basis of production volume of
concerned) of depreciation periods
for capital
goods actually imported under the EPCGS by each
company,
resulting into a normal depreciation
period of 15,5 years. The amount so calculated
which is attributable to the investigation period has
been adjusted by adding interest during the invest-
igation period in order to establish the full benefit
to the recipient under this scheme. Given the
nature of this subsidy, which is equivalent to a
one-time grant, the commercial interest rate during
the investigation period in India, i.e. 14,58 % was
considered appropriate. This amount has then been
allocated over total exports during the investigation
period.

Three companies availed themselves of this scheme
during the investigation period and obtained bene-
fits of between 0,1 and 1,1 %.

Facor (Ferro Alloys Corp. Ltd) provided incomplete
verifiable information relating to this scheme. In
accordance with the provisions of Article 28(1) of
the Basic Regulation, provisional findings relating

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Official Journal of the European Communities

18. 7. 98

to subsidies received by this company under this
scheme could not be based on the insufficient
information submitted and have been made on the
basis of the facts available. In view of the absence
of other reliable information from independent
sources and in order
to avoid rewarding non-
cooperation, it was considered appropriate to apply
the highest rate of benefit under the scheme estab-
lished for the other cooperating exporters to this
company, i.e. 1,1 %.

(46)

One company, Raajratna Metal
Industries Ltd,
availed itself of the scheme with regard to ma-
chinery imported for production of a product (wire
rod) not subject to the investigation. The Commis-
sion verified that the imported machinery could
only be used for finishing operations on wire rod
sold separately, that is that the machinery was not
used in the production of stainless steel bright bars
in the manufacturing process
at
any
(including
common raw
material). For that company therefore, it is con-
sidered that no benefit is conferred on the produc-
tion of stainless steel bars under this scheme.

the production of

stage

Oriented Units. Exemption under Section 80HHC
can be claimed by any firm which exports goods.

(b) Practical implementation

To benefit from the abovementioned deductions/
exemptions from paying tax, a company will make
the relevant claim when submitting its tax return to
the tax authorities at the end of the tax year. The
tax year runs from 1 April to 31 March. The tax
return must be submitted to the authorities by the
following 30 November. The final assessment by
the authorities can take up to three years after
submitting the tax return. A company can only
claim one of the deductions available under the
three sections mentioned above.

Under Sections 10A, 10B and 80HHC companies
can claim exemption from taxable income for
profits realised on export sales. Only the 80HHC
income tax exemption was used by the companies
during the investigation period.

5. Export Processing Zones

(EPZ)/Export

Oriented Units (EOU)

(c) Conclusion on ITES

(43) Another

instrument under

Import
Policy involving export related assistance is the
EPZ/EOU scheme which was introduced on 22
June 1994.

the Export

The Commission established that no producer of
the product concerned was established in an EPZ
or was an EOU. There is therefore no need for the
Commission to assess this scheme in the context of
the investigation.

(47)

Item (e) of the Illustrative List of Export Subsidies
(Annex I to the Basic Regulation) refers to the ‘full
or partial exemption . . . related to exports, of direct
taxes' as constituting an export subsidy. Under the
ITES, the GOI confers a financial contribution to
the company by foregoing government revenue in
the form of direct taxes which would otherwise be
due if the income tax exemptions were not claimed
by the
contribution
confers a benefit on the recipient by reducing its
income tax liability.

company. This

financial

6. Income Tax Exemption Scheme (ITES)

(44)

The Income Tax Act 1961 is the legal basis under
which the ITES operates. The Act, which is
amended yearly by the Finance Act, sets out the
basis for the collection of taxes as well as various
exemptions/deductions which can be claimed.
Among the exemptions which can be claimed by
firms are those covered by Sections 10A, 10B and
80HHC of the Act.

(a) Eligibility

(45)

Exemption under Section 10A can be claimed by
firms located in Free Trade Zones. Exemption
under Section 10B can be claimed by Export

(48)

The subsidy is contingent
in law upon export
performance in the meaning of Article 3(4)(a) of the
Basic Regulation, since it exempts profits from
export sales only, and is therefore deemed to be
specific.

(d) Calculation of the subsidy amount

(49) As stated in recital 46, claims for benefit under
Sections 10A, 10B and 80HHC are made when
submitting a tax return at the end of the tax year.
As the tax year in India runs from 1 April to 31
March, it is considered appropriate to calculate the
benefit under this scheme on the basis of the tax
year 1996/97 (i.e. 1 April 1996 to 31 March 1997)
which covers
the investigation
period. The benefit to the exporters has therefore
the difference
been calculated on the basis of

six months of

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between the amount of taxes normally due with
and without the benefit of the exemption. Account
has been taken of the fact that some companies are
liable to the payment of Minimum Alternate Tax
which is an alternative method of calculating tax
due under
the Income Tax Act. The rate of
corporate tax applicable during this tax year was
43 %. In order to establish the full benefit to the
recipient, this amount has been adjusted by adding
interest during the investigation period. Given the
nature of this subsidy, which is equivalent to a
one-time grant, the commercial interest rate during
the investigation period in India (14,58 %) was
considered appropriate. The amount of benefit has
been allocated over total exports during the tax year
1996/97.

During the tax year 1996/97 six companies bene-
fited from this scheme under Section 80HHC and
obtained subsidies of from 0,7 to 2,8 %.

7. Amount of countervailable subsidies

(50)

In view of the above, the total amount of counter-
vailable subsidies
the investigated
for each of
exporters is as follows:

Passbook

DEPB

EPCGS

Bhansali Bright Bars

Facor

Grand Foundry

Isibars

Mukand

Panchmahal Steel

Raajratna

Venus Wire

Viraj Alloys

13,8 %

84,5 %

84,5 %

38,7 %

18,1 %

0,2 %

44,2 %

22,9 %

25,6 %

1,1 %

1,1 %

0,1 %

0,7 %

Income
tax

Total

0,7 %

14,5 %

85,6 %

84,5 %

41,0 %

19,7 %

0,9 %

47,0 %

24,8 %

27,0 %

1,2 %

1,5 %

2,8 %

1,9 %

1,4 %

D. INJURY

3. Consumption in the Community

1. Community industry

(51)

The aggregated production of the five Community
producers of SSB that had supported the complaint
and fully cooperated with the Commission (see
recital 5) accounts for 45 % of total Community
production. These
the
‘Community industry' as defined in Articles 9(1)
and 10(8) of the Basic Regulation.

companies

constitute

(53)

apparent

The
SSB in the
consumption of
Community during the period January 1994 to
June 1997 was based on total production in the
Community plus total imports minus total exports.
In this respect, the Commission relied on data
provided by the Community industry, the other
producers located in the Community and Eurofer,
as well as on Eurostat statistics.

(54) During the period 1994 to June 1997 the total
consumption in the Community expressed in
tonnes amounted to 117 039 in 1994, 146 025 in
1995, 113 448 in 1996, and 148 457 in IP12.

2. General remarks

(52)

It will be recalled that the investigation period has
a duration of only nine months. Therefore, for the
purpose of comparison, the findings relating to the
investigation period were
extrapolated to 12
months in order to allow for a comparison on a
yearly basis (hereinafter ‘IP12').

4. Import volumes and market share of sub-

sidized imports

(55)

The Indian import volume in tonnes developed as
follows: 7 597 in 1994, 11 170 in 1995, 10 329 in
1996 and 8 311 in IP12, which corresponds to an
overall increase of 714 tonnes or 9,4%, with a peak
of 36 % (2 732 tonnes) between 1994 and 1996.

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Official Journal of the European Communities

18. 7. 98

(56)

The Indian market share (based on Eurostat data)
increased constantly from 6,5 % in 1994 to 7,6 %
in 1995 and to 9,1 % in 1996. This corresponds to
an increase of 40 % when comparing the years
1994 and 1996. During the investigation period the
market share dropped but remained at the signific-
ant level of 5,6 %.

(57)

(58)

5. Prices of subsidized imports from India

and price undercutting

It has been established for the period from 1994 to
the investigation period that, based on Eurostat
figures,
from India have been made
consistently at prices which undercut those of the
analysis has been
Community industry. This
confirmed in detail for the investigation period.

imports

In particular, in order to establish whether prices of
the
the cooperating Indian exporters undercut
Community industrys’
sales prices, a detailed
analysis was carried out for each of them for sales
made during the investigation period. This was
their
done by comparing, per product
weighted average export prices with the weighted
average sales prices of the Community industry to
unrelated parties. If exports were made through
related companies the export prices were duly
adjusted for costs between importation and sales to
the first independent customer. For the purposes of
comparison,
the products were grouped into
product types according to steel grade, shape, dia-
meter and tolerance.

type,

(59) Adjustments to the Indian export prices were made
where appropriate for transport costs and handling
charges
free-at-
Community-frontier level, customs cleared price.

in order

arrive

the

to

at

(60) An adjustment

to the

sales prices of

sold to traders only whereas

the
Community producers was made for differences in
levels of trade since it was found that the Indian
producers
the
Community industry sold to both traders and users,
granting significant discounts
to traders. The
adjustment was made by reducing the Community
industry’s sales prices to end-users reflecting the
discounts granted. Furthermore,
the Community
industry’s sales prices were adjusted where appro-
priate for transport costs.

(62)

(63)

(64)

which (cid:190) as a consequence (cid:190) could not be
properly verified.

for

Indian requests

(Indian producers

Similarly,
an adjustment
concerning (1) different lead times between order
and delivery and (2) different price setting mech-
fixed prices
anisms
whereas Community producers use a base price
system and add a so-called ‘alloy surcharge' for
nickel, chromium and molybdenum) could not be
granted since it was not demonstrated that they
affected price comparability.

sell at

they used payment

Furthermore, a request for an adjustment for differ-
ences in payment
terms made by two Indian
exporting producers could not be accepted. The
Indian exporting producers had stated that,
terms applied by the
contrary to the payment
Community industry,
terms
requiring payment approximately 30 days before
the goods were delivered. This statement is contra-
dicted by the findings of the Commission, which
established that the Indian producers concerned
apply payment terms requesting payment 60 days
after the shipping date. Since transport from India
to the Community does not exceed, on average, 30
days, the Indian producers received payment not
before, but after delivery, as was found for the
Community industry.

Finally, the Indian producers requested that India’s
exemption from the 4,2 % customs duty on the
product concerned under the GSP regime be taken
into account for the calculation of price undercut-
ting and injury elimination (see
recital 97).
According to these producers the Indian export
prices should be increased by 4,2 % ‘as if' imports
from India did not benefit from the GSP system.
This argument was not accepted because the calcu-
lation of price undercutting is based on the actual
prices paid on the market. Hypothetical duties can
therefore not be considered. The relevant legisla-
tion, in particular Article 13 of Council Regulation
(EC) No 3281/94 (1), as last amended by Regulation
(EC) No 602/98 (2), states that the granting of GSP
treatment does not preclude to counteract injurious
dumping.

(61)

The Indian exporting producers
requested an
adjustment for alleged quality differences, which
could not be granted since the chemical compos-
the product concerned is governed by
ition of
international standards. The request was only made
in a general manner,
i.e. no company-specific
information was provided by the Indian producers

(65)

The comparison of
the duly adjusted weighted
average export prices with the weighted average

(1) OJ L 348, 31. 12. 1994, p. 1.
(2) OJ L 80, 18. 3. 1998, p. 1.

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sales prices of the Community industry showed
that the Indian exporting producers had undercut
the sales prices of the Community producers as
follows:

(cid:190) Bhansali Bright Bars Pvt Ltd, Mumbai 14,5 %

(cid:190) Facor (Ferro Alloys Corp. Ltd), Nagpur 16,5 %

(cid:190) Grand Foundry Ltd, Mumbai

(cid:190) Isibars Ltd, Mumbai

(cid:190) Mukand Ltd, Mumbai

13,3 %

19,5 %

17,9 %

(cid:190) Panchmahal Steel Ltd, Baroda

13,9 %

(cid:190) Raajratna Metal Industries Ltd,

Ahmedabad

16,8 %

In addition, it was noted that (cid:190) when comparing
the sales prices of the Community industry (cid:190) the
sales prices for identical product
types sold to
comparable categories of customers varied substan-
tially within the same time period. Moreover, it was
noted that sales prices varied over different time
periods
(with a downward trend since 1995)
resulting in different levels of profitability for the
producers making up the Community industry
over different periods. The Commission therefore
concluded that, contrary to the allegation of the
Indian producers, there was nothing at this stage of
the investigation to indicate that the undercutting
calculation was meaningless.

6. Situation of the Community industry

6.1. Production volume,

capacity and capacity

(cid:190) Venus Wire Industries Ltd, Mumbai

13,2 %

utilisation

(cid:190) Viraj Alloys Ltd, Mumbai

19,8 %.

(66)

In the course of the investigation, certain Indian
producers argued that the calculation of undercut-
ting margins would be meaningless in the context
of this investigation in view of the findings set out
in Commission Decision
98/247/ECSC in
(Case IV/35.814 (cid:190) Alloy
competition matters
Surcharge) (1).

This Decision stated that Community producers of
stainless steel (cid:190) flat products (cid:190) had modified ‘in a
concerted fashion the reference values used to
calculate the alloy surcharge, a practice having the
object and effect of
restricting and distorting
competition within the common market'.

It should be noted, however, that this Decision
does not relate to the product subject to the anti-
subsidy investigation. SSB fall
into the category
stainless steel long products, as opposed to stainless
steel flat products, the product concerned by the
abovementioned Decision.

The Indian companies confirmed this distinction,
but alleged that a concerted practice also existed for
them lodged a formal complaint
SSB. Two of
pursuant to Article 3 of Council Regulation No
17/62 (2). However, at
this stage, no conclusive
evidence was submitted or made available to the
Commission which suggested that the producers of
SSB had (cid:190) ‘in a concerted manner agreed on a
price setting mechanism for SSB'. In this context it
is important to underline that the producers of
stainless steel (cid:190) flat products (cid:190) and the producers
of SSB are, to a large extent, not identical.

(67) During the period 1994 to June 1997 the total
production of the Community industry expressed
in tonnes amounted to 60 800 in 1994, 65 459 in
1995, 53 070 in 1996, and 66 640 in IP12.

(68)

It was concluded that the total production of the
Community industry had fluctuated over recent
years in reaction to changes in demand and low-
priced imports from India. While 1995 in terms of
production can be described as a successful year for
the Community industry due to very high demand,
1996 showed a significant drop in the level of
in
production. This was due
Community consumption in 1996 and to the
Indian exporting producers selling their products at
very low prices,
thereby undercutting the sales
prices of
the Community industry. During the
the
the
investigation period
Community industry increased again, benefiting
from higher demand, but only achieved lower sales
prices.

to a decrease

production of

(69) As far as the development of capacity and capacity
utilisation is concerned, the Community industry
uses the same machines also for the manufacture of
other products. Therefore, it is difficult to assess the
precise capacity and capacity utilisation rates for
the product concerned. Hence, it was considered
appropriate not to draw any conclusions on the
basis of these two factors.

6.2. Sales volume

(1) OJ L 100, 1. 4. 1998, p. 55.
(2) OJ 13, 21. 2. 1962, p. 204/62.

(70)

The sales volume by the Community industry to
unrelated parties in the Community (expressed in

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18. 7. 98

tonnes) was 31 659 in 1994, 33 264 in 1995, 22 988
in 1996, 21 081 in the investigation period and
28 108 in IP12, whereas the sales volume to related
parties was 12 977 in 1994, 13 675 in 1995, 11 930
in 1996, 13 092 in the investigation period and
17 456 in IP12.

(71)

similar

It was concluded that the sales volume to unrelated
parties in the Community as well as the combined
volume to unrelated and related parties in the
Community followed a
trend as was
observed for
the volume of production. Sales
volumes fluctuated over the past few years and
1996 showed a particularly significant drop. This
trend was only reversed after
significant price
reductions during the investigation period with a
higher sales volume in this period when compared
to 1996.

(72)

This development corresponds to a loss of more
than 11 % of sales volumes to unrelated parties
when comparing 1994 and IP12. In this respect it
was also noted that the Community industry could
not benefit from the overall growth in the market.

6.3. Market share

(73) While

share of

the market

in the market share of

Indian imports
increased significantly between 1994 and 1996 (see
above), the same period showed a negative develop-
ment
the Community
industry. For sales to both related and unrelated
parties it was noted that while the Community
industry accounted for 38,1 % of the market in
1994, its market share amounted to 32,1 % in 1995
and 30,8 % in 1996. This corresponds to a loss of
19,2 %. The market share reached its lowest level
in the investigation period with 30,7 %.

(74) As regards sales to unrelated parties only, it was
established that
share decreased
the market
significantly from 27,0 % in 1994 to 22,8 % in
1995 and to 20,1 % in 1996. Again, this corres-
ponds to a loss of 25,6 %. The market share
reached its lowest level in the investigation period
with 18,9 %.

6.4. Sales prices

(75)

further

losses of market

The sales prices of
the Community industry
followed a downward trend since 1995. In order to
prevent
the
Community industry lowered its prices by 21 %
since 1995. Expressed in index form the sales
prices decreased from 134 in 1995 to 126 in 1996
and to 106 in the investigation period (index 100
corresponds to 1994).

share

6.5. Profitability

(76) As regards profitability, the investigation showed
that with one exception all the producers forming
the Community industry were in a better financial
situation in 1994 than during the investigation
period. The profit margins of all companies
dropped significantly, notably between 1995 and
the investigation period, and one company in
particular faced significant losses during the invest-
igation period. The weighted average profit margin
during the investigation period was unsatisfactory
for all but one producer due to the reduction in
sales prices.

The index of
the profit margin developed as
follows: 100 in 1994, 312 in 1995, 151 in 1996 and
73 in the investigation period.

6.6. Employment and stocks

(77) As regards employment, the Community industry’s
workforce remained almost stable from 602 in
1994 to 592 during the investigation period. In
some instances redundancies could only be avoided
by short time working.

(78)

The stocks increased by more than 3 000 tonnes
between 1994 and the investigation period and
amounted to 10 923 tonnes by the end of
the
investigation period.

7. Conclusions

(79)

the

From the above it can be concluded that
the
Community industry is suffering material injury.
The main injury factors are the significant price
undercutting practiced by the Indian exporting
producers,
the
Community industry’s sales prices, the unsatisfac-
tory profitability, the significant gain in market
share by the Indian exporting producers from 1994
to 1996 and the corresponding loss of market share
by the Community industry, the losses in sales
volumes and the increase in stocks.

consequent depression of

E. CAUSATION

1. Effect of the subsidized imports

(80)

The rapid increase in the market share held by
Indian imports (40 % between 1994 and 1996) and
the substantial price undercutting found (up to
the
16,3 %) coincide with the deterioration of
situation of the Community industry, in particular
its loss of market share, depressed prices and un-
satisfactory profitability.

(81) When faced with subsidized imports originating in
India, the Community industry had the choice (cid:190)
after the successful year of 1995 (cid:190) of either main-
taining its prices or of following the subsidised

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prices with negative consequences for profitability.
In 1996, some Community producers tried to
maintain their sales prices at a high level, whilst
others reduced them. Both strategies resulted in a
negative impact on profitability either directly
(lower prices) or indirectly (lower sales volume
resulting in higher overheads per
tonne sold).
During the investigation period all Community
producers lowered their sales prices still further,
which again had a negative impact on their profit-
ability. This clearly shows the price sensitivity of
the market and the important impact of the price
undercutting practised by the Indian exporting
producers.

(82) Certain Indian exporting producers submitted that
they had not caused any material injury since they
only sold to a limited number of traders whereas
the Community producers also sold to users and
traders which were not customers of the Indian
producers. Accordingly,
there would only be
limited competition between the Indian and
Community products affecting 35 % of the total
Community market. This argument is contradicted
by the transparency of the market reacting quickly
to changes in prices and the possibility for the
Indian producers to sell to other purchasers in the
Community.

industry. Due to a lack of verifiable information
and taking into account the transparency of the
SSB’s market in the Community (cid:190) in particular as
regards prices (cid:190) it is concluded that the other
producers located in the Community are likely to
have followed a similar trend to the cooperating
producers.

(86)

(87)

Furthermore, it was found that imports from other
countries had had no decisive impact on the
Community industry. These imports were made
either in negligible quantities and/or at higher
prices. Only Russian imports appear, on average, to
have been made at lower prices than those from
India, but
imported during the
investigation period accounted only for 1,2 % of
the Community market.

the quantities

Finally, the Indian producers have argued that the
prices of hot-rolled bars, i.e. the major raw material
for the production of SSB, and the prices of SSB
have not followed the same downward trend over
the last years. This allegedly has led to difficulties
for non-integrated producers, as they were forced to
purchase their raw materials at higher prices. The
difficulties of the non-integrated producers could
therefore not be attributed to the Indian imports.
This claim was not substantiated and could not be
therefore taken into consideration at this stage.

2. Other factors

3. Conclusion

(83)

The Commission also considered whether other
factors such as the overall development of
the
market, the behaviour of the Community industry
itself or imports from other countries could have
caused the injury suffered by the Community
industry.

(88)

(84) Certain

that

Indian

alleged

producers

the
complaining Community industry was inefficient
and drew attention in particular to the low rate of
capacity utilisation. In any event, as indicated
above, it was considered not appropriate to use the
capacity utilisation rate as a decisive injury factor.
However, any decrease in capacity utilisation would
occur at a time of a substantial decrease in sales of
the Community industry coinciding with an
increase in subsidized imports.

In view of the coincidence in time between the
level of price undercutting, the reduction in the
sales price of the Community industry and the
unsatisfactory profitability, as well as the significant
market share gained by the Indian imports from
1994 to 1996 (a trend which could only be reversed
after price decreases by the Community industry)
and the corresponding loss of market share suffered
by the Community industry, it was concluded that
the subsidised imports from India (cid:190) taken in
isolation (cid:190) had caused material
injury to the
Community industry.

F. COMMUNITY INTEREST

(85)

In the course of
the investigation it was also
considered whether the situation of the producers
in the Community which were not part of the
Community industry as defined in recital 51 was
any different from the situation of the Community

(89)

In accordance with Article 31 of the Basic Regula-
tion, and in order to evaluate whether the adoption
of countervailing measures would be against the
interest of
the
Commission examined the impact of taking or not
taking measures on the various interests involved.

the Community as

a whole,

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18. 7. 98

(90) Measures can not be applied where the Community
institutions, on the basis of
information
submitted, clearly conclude that it is not in the
interest of the Community to apply such measures.

all

(91)

(92)

(93)

the outcome of

In order to investigate this issue, questionnaires
were sent to 59 users of SSB but no substantiated
replies were received. This was considered as
the investigation
meaning that
would probably not have a significant impact on
users, either because SSB are not a significant cost
factor for them or because their production of
downstream products relating to SSB only accounts
for a small proportion of total production. Anyhow,
it was noted that any price increase resulting from
the countervailing measures would be moderate
given the high number of competitors inside and
outside the Community.

raw material

Fourteen suppliers of
to SSB
Community producers were also contacted. Their
replies indicated that the re-establishment of fair
trade would lead to benefits to this upstream
industry from the point of view of production,
sales, employment and profitability.

Finally, it has been argued that it could not be in
the interest of the Community to impose measures
taking into account
the aforementioned alleged
practices in the calculation of the alloy surcharge.
In this respect reference is made to the comments
made above. Furthermore, consideration was given
to the fact that no user replied to the Commission’s
questionnaire, arguing that purchase prices of the
Community industry for SSB were unjustifiably
high.

(94)

In short, there was no evidence to suggest that it
was not
the Community to
impose measures.

in the interest of

G. PROVISIONAL DUTY

(95) On the basis of the conclusions on subsidization,
injury, causal
link and Community interest, the
Commission considers it necessary to adopt pro-
visional countervailing measures.

the Commission took account of

For the purpose of determining the level of these
measures,
the
subsidy margins found and of the amount of duty
necessary to eliminate the injury sustained by the
Community industry.

(96)

(97)

weighted average import price used to establish
price undercutting, as outlined in recital 58 et
subseq. with the weighted average cost of produc-
tion of the Community industry and a reasonable
return on sales of the product concerned. In this
respect a profit rate of 5 % on turnover was used.
The Commission considers this profit level suffi-
cient given the mature nature of
the product
concerned.

(98)

This comparison showed the following injury
margins
(expressed in relation to the free-at-
Community-frontier price level):

(cid:190) Bhansali Bright Bars Pvt Ltd, Mumbai 18,3 %

(cid:190) Facor (Ferro Alloys Corp. Ltd), Nagpur 11,5 %

(cid:190) Grand Foundry Ltd, Mumbai

(cid:190) Isibars Ltd, Mumbai

(cid:190) Mukand Ltd, Mumbai

(cid:190) Panchmahal Steel Ltd, Baroda

(cid:190) Raajratna Metal Industries Ltd,

Ahmedabad

16,7 %

25,0 %

24,5 %

17,6 %

21,2 %

(cid:190) Venus Wire Industries Ltd, Mumbai

16,5 %

(cid:190) Viraj Alloys Ltd, Mumbai

23,5 %.

(99)

In accordance with Article 12(1) of the Basic Regu-
lation the duty rate should correspond to the
subsidy margin, unless the injury margin is lower.
The following rates of duty therefore apply for the
cooperating producers:

(cid:190) Bhansali Bright Bars Pvt Ltd, Mumbai 14,5 %

(cid:190) Facor (Ferro Alloys Corp. Ltd), Nagpur 11,5 %

(cid:190) Grand Foundry Ltd, Mumbai

(cid:190) Isibars Ltd, Mumbai

(cid:190) Mukand Ltd, Mumbai

(cid:190) Panchmahal Steel Ltd, Baroda

(cid:190) Raajratna Metal Industries Ltd,

Ahmedabad

16,7 %

25,0 %

19,7 %

0 %

21,2 %

(cid:190) Venus Wire Industries Ltd, Mumbai

16,5 %

(cid:190) Viraj Alloys Ltd, Mumbai

23,5 %.

To that effect, the Commission considered that the
prices of subsidized imports should be increased to
a non-injurious level. The necessary price increase
was determined on the basis of a comparison of the

(100)

In order
to avoid granting a bonus for non-
cooperation, it was considered appropriate to estab-
lish the duty rate for the non-cooperating com-
panies at the level of the highest duty rate found,
i.e. 25 %.

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H. FINAL PROVISION

(101)

(102)

In the interests of sound administration, a period
should be fixed within which the interested parties
which made themselves known within the time
limit specified in the notice of initiation may make
their views known in writing and request a hearing.
Furthermore, it should be stated that the findings
made for the purposes of this Regulation are provi-
sional and may have to be reconsidered for the
purposes of any definitive duty.

In accordance with Article 24(1) of the Basic Regu-
lation no product shall be subject to both anti-
dumping and countervailing duties for the purpose
of dealing with one and the same situation arising
from dumping or
subsidization.
Considering that anti-dumping duties have been
imposed on imports of the product in question it is
necessary to determine whether and to what extent
the subsidy and the dumping margin arise from the
same situation.

from export

(103)

In the case in question all of
the investigated
schemes have been found to constitute export
subsidies within the meaning of Article 3(4)(a) of
the Basic Regulation. As such the subsidies can
only affect the export prices of the Indian produ-
cers leading to increased margins of dumping. In
other words the dumping margins established are

wholly or partly due to the existence of export
subsidies. In these circumstances it is not con-
sidered appropriate to impose both countervailing
and anti-dumping duties to the full extent of the
relevant subsidy and dumping margins established.
In view of the fact the dumping margins are wholly
or partly due to the existence of the export subsi-
dies, the anti-dumping duties, imposed by Regula-
tion (EC) No 1084/98, need to be adjusted to
reflect the actual dumping margins remaining after
the imposition of the countervailing duties offset-
ting the effect of the export subsidies,

HAS ADOPTED THIS REGULATION:

Article 1

1. A provisional countervailing duty is hereby imposed
on imports of stainless steel bars and rods not further
worked than cold-formed or cold-finished, containing by
weight 2,5 % or more of nickel, of circular cross-section
as well as of other cross-sections, falling within CN codes
7222 20 11, 7222 20 21, 7222 20 31 and 7222 20 81 and
originating in India.

The rate of duty applicable to the net

2.
Community-frontier price, before duty,
follows:

free-at-
shall be as

Manufacturer

Rate of duty
(%)

TARIC
additional
code

Bhansali Bright Bars Pvt Ltd, Mumbai

Facor (Ferro Alloys Corp. Ltd), Nagpur

Grand Foundry Ltd, Mumbai

Isibars Ltd, Mumbai

Mukand Ltd, Mumbai

Panchmahal Steel Ltd, Baroda

Raajratna Metal Industries Ltd, Ahmedabad

Venus Wire Industries Ltd, Mumbai

Viraj Alloys Ltd, Mumbai

All other companies

14,5

11,5

16,7

25,0

19,7

0

21,2

16,5

23,5

25,0

8226

8400

8401

8402

8403

8404

8405

8407

8410

8900

3. Unless otherwise specified, the provisions in force concerning customs duties shall
apply.

4.
The release for free circulation in the Community of the product referred to in
paragraph 1 shall be subject to the provision of a security, equivalent to the amount of the
provisional duty.

L 202/54

EN

Official Journal of the European Communities

18. 7. 98

Article 2

Article 1(2) of Regulation (EC) No 1084/98 is hereby amended as follows:

The rate of duty applicable to the net free-at-Community-frontier price, before

‘2.
duty, shall be as follows:

Manufacturer

Rate of duty
(%)

TARIC
additional
code

Bhansali Bright Bars Pvt Ltd, Mumbai

Facor (Ferro Alloys Corp. Ltd), Nagpur

Grand Foundry Ltd, Mumbai

Isibars Ltd, Mumbai

Mukand Ltd, Mumbai

Panchmahal Steel Ltd, Baroda

Raajratna Metal Industries Ltd, Ahmedabad

Venus Wire Industries Ltd, Mumbai

Viraj Alloys Ltd, Mumbai

All other companies

2,2

0

0

0

0

11,4

0

0

0

0

8226

8400

8401

8402

8403

8404

8405

8407

8410

8900'

Article 3

Without prejudice to Article 30 of Regulation (EC) No
2026/97, the interested parties which made themselves
known within the time limit specified in the notice of
initiation may make known their views in writing and
apply to be heard orally by the Commission within 15
days of the date of entry into force of this Regulation.

this Regulation within one month of the date of its entry
into force.

Article 4

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

Pursuant to Article 31(4) of Regulation (EC) No 2026/97,
the parties concerned may comment on the application of

Article 1 of this Regulation shall apply for a period of
four months.

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

Done at Brussels, 17 July 1998.

For the Commission

Leon BRITTAN

Vice-President