Council Regulation (EC) No 2049/1999 of 27 September 1999 amending Regulation (EC) No 2450/98 imposing a definitive countervailing duty on imports of stainless steel bars originating in India and collecting definitively the provisional duty imposed
Date: 1999-09-27
Institutions: Council of the European Union
Subjects: India, anti-dumping duty, bar, import, originating product, steel

L 255/8

EN

Official Journal of the European Communities

30. 9. 1999

COUNCIL REGULATION (EC) No 2049/1999

of 27 September 1999

amending Regulation (EC) No 2450/98 imposing a definitive countervailing duty on imports of
stainless steel bars originating in India and collecting definitively the provisional duty imposed

THE COUNCIL OF THE EUROPEAN UNION,

2. Initiation of an accelerated review

Having regard to the Treaty establishing the European
Community,

(3)

Having regard to Council Regulation (EC) No 2026/97 of 6
October 1997 on protection against subsidised imports from
countries not members of the European Community (1), and in
particular Articles 15 and 20 thereof,

Having regard to the proposal submitted by the Commission
after consulting the Advisory Committee,

Whereas:

A. PREVIOUS PROCEDURE

By Regulation (EC) No 2450/98 (2), the Council imposed
a definitive countervailing duty on imports of stainless
steel bars (hereinafter referred to as ‘the product con-
cerned’)
7222 20 11,
7222 20 21, 7222 20 31 and 7222 20 81 originating in
India. The measures took the form of ad valorem duties
of between 0 and 25,5 % with a residual duty of 25,5 %.

falling within

CN codes

(4)

(5)

(1)

(2)

B. CURRENT PROCEDURE

1. Request for review

Subsequent to the imposition of definitive measures, the
Commission received a request for the initiation of an
accelerated review of Regulation (EC) No 2450/98,
pursuant to Article 20 of Regulation (EC) No 2026/97
(hereinafter referred to as ‘the basic Regulation’), from
two Indian producers, Sindia Steels Ltd and Meltroll
Engineering Pvt. Ltd, both located in Bombay. The
companies concerned claimed that they were not related
to any other exporters of the product concerned in
India. Furthermore,
they had not
exported the product concerned to the Community
during the original period of investigation (1 July 1996
to 30 June 1997), but had exported the product
concerned to the Community since then.

they claimed that

Both companies requested the establishment of an indi-
vidual rate of duty. In the case of Sindia Steels Ltd, this
company had made itself known during the original
investigation, but as
it had not exported to the
Community during the investigation period, it was al-
located a weightedaverage countervailing duty of 22,1 %.
Meltroll Engineering Pvt. Ltd has been subject to the
residual 25,5 % countervailing duty.

The Commission examined the evidence submitted by
the two Indian exporting producers concerned and
considered it sufficient
to justify the initiation of a
review in accordance with the provisions of Article 20
the
the basic Regulation. After consultation of
of
Advisory Committee and after the Community industry
concerned had been given the opportunity to comment,
the Commission initiated, by a notice in the Official
Journal (3), an accelerated review of Regulation (EC) No
2450/98 with regard to the companies concerned and
commenced its investigation.

3. Product concerned

The product covered by the current review is the same
product as that under consideration in Regulation (EC)
No 2450/98.

4. Parties concerned

The Commission officially advised the two companies
concerned and the Government of India. Furthermore, it
gave other parties directly concerned the opportunity to
make their views known in writing and to request a
hearing. However, no such request was received by the
Commission.

The Commission sent a questionnaire to the companies
concerned and received full replies within the deadline.
The Commission sought and verified all information it
deemed necessary for the purpose of the investigation
and carried out verification visits at the premises of the
companies concerned.

5. Investigation period

(6)

The investigation of subsidisation covered the period
from 1 January 1998 to 31 December 1998 (hereinafter
referred to as ‘the investigation period’).

6. Methodology

(7)

The same methodology as that used in the original
investigation was applied in the current investigation.

C. SCOPE OF THE REVIEW

(8)

This review was limited to calculating the amount of
subsidisation granted to Sindia Steels Ltd and Meltroll
Engineering Pvt. Ltd.

(1) OJ L 288, 21.10.1997, p. 1.
(2) OJ L 304, 14.11.1998, p. 1.

(3) OJ C 19, 23.1.1999, p. 17.

30. 9. 1999

EN

Official Journal of the European Communities

L 255/9

(9)

(10)

(11)

The Commission examined the same subsidy schemes
which were analysed in the original investigation. It also
examined whether the new exporters had used any
subsidy schemes which were alleged in the original
complaint but not used during the original investigation.

It was finally examined whether the new exporters had
made use of any subsidy schemes which were estab-
lished after the end of the original investigation period,
or had received ad hoc subsidies after this date.

D. RESULTS OF THE INVESTIGATION

1. New exporter qualification

investigation confirmed

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

that

the

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

it

is

the

confirmed that

Accordingly,
companies
concerned should be considered as new exporters in
accordance with Article 20 of the basic Regulation and
thus individual amounts of subsidy should be deter-
mined for them. The fact that Sindia Steels is already
subject to a weighted-average, rather than the residual,
countervailing duty on the product concerned does not
in any way prejudice its right to request a new exporter
review, given that all the criteria set out in the said
Article 20 are fulfilled.

4. Duty entitlement passbook scheme (DEPB)

General

(14)

It was established that the two companies concerned
received benefits under this scheme. Both companies
used the DEPB on a post-export basis.

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 prod-
ucts, including the products 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) except for goods of which the import is
restricted or prohibited. 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.

(15)

The characteristics of the DEPB have not changed since
the original investigation. The subsidy conferred by the
from import duty is contingent on export
relief
performance, and it was therefore determined during the
original investigation that it is specific and countervail-
able under Article 3(4)(a) of the basic Regulation.

2. Subsidisation

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

Calculation of the subsidy amount

— passbook scheme,

— duty entitlement passbook scheme,

(16)

— export promotion capital goods scheme,

— export processing zones/export oriented units,

— income tax exemption scheme.

All these schemes had been found to be countervailable
investigation.
during the original

3. Passbook scheme (PBS)

(13) Neither of the companies concerned had availed them-
selves of the passbook scheme, which on 1 April 1997,
i.e. during the original investigation period, was abol-
ished and replaced by its successor, the duty entitlement
passbook scheme (DEPB).

(1) OJ L 79, 24.3.1999, p. 25.
(2) OJ L 79, 24.3.1999, p. 60.

It was established that neither of the companies used the
licences to make duty-free imports. Instead the com-
panies sold some of their licences, and the benefit was
calculated on the basis of the amount of credit in the
licence regardless of the sales price of the licence. The
companies concerned claimed that the benefit should be
limited to the effective sales price of the licence which is
the credits in the
often less than the face value of
licence. However,
in accordance with the provisional
findings in the cases of stainless steel wire from India
(Commission Regulations (EC) No 618/1999 (1) and (EC)
No 619/1999 (2), this claim cannot be granted since the
sale of a licence at a price less than the face value is a
purely commercial decision which does not alter the
countervailable benefit from this scheme.

L 255/10

EN

Official Journal of the European Communities

30. 9. 1999

(17)

In order to establish the full benefit to the recipient
under this scheme,
this amount of credit has been
adjusted by adding interest during the original invest-
igation period. Since the benefits from import duty
exemptions are obtained regularly during the invest-
igation period, it was considered appropriate to follow
the practice established in the original investigation and
add interest covering a period of six months, equivalent
to half of
the annual commercial rate in India of
14,58 % found during the original investigation period,
i.e. 7,29 %. This amount (i.e. unpaid customs duty plus
interest) has been allocated over total exports during the
investigation period.

Sindia Steels Ltd and Meltroll Engineering Pvt. Ltd bene-
fited from this scheme during the investigation period
and obtained subsidies of 11,7 % and 4,9 % respectively.
Where the companies claimed deductions linked to the
payment of fees for obtaining the DEPB licence, these
were granted.

5. Export promotion capital goods scheme (EPCGS)

General

ment to export goods, and is therefore deemed to be
specific and countervailable.

Calculation of the subsidy amount

(20)

The benefit to the exporter has been calculated on the
basis of the amount of unpaid customs duty due on
imported capital goods by spreading this amount across
a period which reflects the normal depreciation of such
capital goods in the industry of the product concerned.
This period has been established by using the weighted
average (on the basis of production volume of the prod-
ucts concerned) of depreciation periods for capital goods
actually imported under the EPCGS by Indian producers
during the original investigation period, resulting in a
normal depreciation period of 15,5 years. Since this
subsidy is equivalent to a one-time grant, the amount so
calculated which is attributable to the investigation
period has been adjusted by adding the annual interest
rate of 14,58 %. This amount has then been allocated
over total exports during the investigation period.

(21)

Sindia Steels Ltd obtained a benefit under this scheme of
0,3 %.

(18)

It was established that Sindia Steels Ltd had availed itself
of this scheme.

6. Export processing zones (EPZ)/export oriented

units (EOU)

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

(22)

The Commission established that none of the companies
was located 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.

7. Income tax exemption scheme (ITES)

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

General

An application fee is payable to obtain a licence.

(23)

It was established that Meltroll Engineering Pvt. Ltd had
availed itself of this scheme.

(19)

The characteristics of the EPCGS have not changed since
the original investigation. It was determined during the
original investigation that 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 Government of India (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.

To benefit from 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.

The subsidy is contingent in law on export performance
within the meaning of Article 3(4)(a) of the basic Regu-
lation, since it cannot be obtained without a commit-

Under Section 80HHC companies can claim 100 %
exemption from taxable income for profits realised on
export sales.

30. 9. 1999

EN

Official Journal of the European Communities

L 255/11

(24)

from income

The characteristics of the ITES have not changed since
the original investigation. It was determined during the
original investigation that the subsidy conferred by the
relief
contingent on export
performance within 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 and
countervailable.

tax is

Calculation of the subsidy amount

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 of 14,58 %
was considered appropriate. The amount of benefit has
been allocated over total exports during the tax year
1997/98.

Meltroll Engineering Pvt. Ltd obtained a benefit under
this scheme of 0,6 %.

8. Other schemes

(26)

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

(25) As stated in recital 23, claims for benefit under section
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 calcu-
late the benefit under this scheme on the basis of the tax
year 1997/98 (i.e. 1 April 1997 to 31 March 1998). The
benefit to the exporters has therefore been calculated on
the basis of the difference between the amount of taxes
normally due with and without
the
exemption. The rate of corporate tax applicable during
this tax year was 35 %. In order to establish the full
benefit to the recipient, this amount has been adjusted

the benefit of

(27)

9. Amount of countervailable subsidies

Taking account of the definitive findings relating to the
various schemes as set out above, the amount of coun-
investigated
subsidies
tervailable
exporting producers is as follows:

each of

the

for

DEPB

EPCGS

Income Tax

Total

Sindia Steels Ltd

11,7 %

0,3 %

12,0 %

Meltroll Engineering Pvt. Ltd

4,9 %

0,6 %

5,5 %

E. AMENDMENT OF THE MEASURES BEING REVIEWED

(28)

imports into the
Based on the findings made during the investigation,
Community of stainless steel bars produced and exported by the companies concerned should be
subject to countervailing duties corresponding to individual amounts of subsidies established for
these companies.

is considered that

it

(29)

Regulation (EC) No 2450/98 should therefore be amended accordingly.

F. DISCLOSURE AND DURATION OF THE MEASURE

(30)

(31)

The companies concerned were informed of the facts and considerations on the basis of which it is
intended to propose the amendment of Regulation (EC) No 2450/98, and were given the oppor-
tunity to comment.

The review carried out does not affect the date on which Regulation (EC) No 2450/98 will expire
pursuant to Article 18(1) of the basic Regulation,

HAS ADOPTED THIS REGULATION:

Article 1(2) of Regulation (EC) No 2450/98 is amended as follows:

Article 1

L 255/12

EN

Official Journal of the European Communities

30. 9. 1999

(a) the duty rate for Sindia Steels Ltd (TARIC additional code: 8406) shall be 12 %;

(b) the following shall be added to the list of companies subject to measures:

‘Manufacturer

— Meltroll Engineering Ltd, Mumbai

Rate of duty
(%)

5,5

TARIC additional code

A021’

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

Article 2

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

Done at Brussels, 27 September 1999.

For the Council

The President

K. HEMILÄ