Proposal for a Council Regulation amending Council Regulation (EC) No 1599/1999 imposing a definitive countervailing duty on imports of stainless steel wire having a diameter of 1mm or more, originating in India
Date: 2001-12-21
Institutions: European Commission
Subjects: EU Member State, India, generalised preferences, import, originating product, steel, trade policy

COMMISSION OF THE EUROPEAN COMMUNITIES

Brussels, 21.12.2001
COM(2001) 790 final

Proposal for a

COUNCIL REGULATION

amending Council Regulation (EC) No 1599/1999 imposing a definitive countervailing
duty on imports of stainless steel wire having a diameter of 1mm or more, originating in
India

(presented by the Commission)

EXPLANATORY MEMORANDUM

It is proposed to amend Council Regulation (EC) No 1599/1999 imposing a definitive
countervailing duty on imports of stainless steel wire having a diameter of 1mm or more,
falling within CN code ex 7223 00 19 originating in India.

The attached draft Council Regulation contains more detailed information showing that the
subsidy margin for one new exporter during the period of investigation amounted to 15.8 %.

The investigation also confirmed that this exporter fulfilled all the criteria, in accordance with
Article 20 of the basic Regulation, to be considered as a new exporter.

Therefore, an individual countervailing duty should be granted to this exporter.

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Proposal for a

COUNCIL REGULATION

amending Council Regulation (EC) No 1599/1999 imposing a definitive countervailing
duty on imports of stainless steel wire having a diameter of 1mm or more, originating in
India

THE COUNCIL 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 not members of the European Community1, and in
particular Article 20 thereof,

After consulting the Advisory Committee,

Whereas:

(1)

1.

(2)

A. PREVIOUS PROCEDURE

By Regulation (EC) 1599/19992, the Council imposed a definitive countervailing duty
on imports of stainless steel wire having a diameter of 1mm or more (hereinafter
referred to as ‘the product concerned’) falling within CN code ex 7223 00 19
originating in India. The measures took the form of ad valorem duties of between 0
and 35,4 % on individual exporters with a residual duty of 48,8 %.

B. CURRENT PROCEDURE

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 1599/1999,
pursuant to Article 20 of Regulation (EC) 2026/97 (hereinafter referred to as ‘the basic
Regulation’), from two Indian producers of the product concerned, Sindia Steels
Limited and Nevatia Steel & Alloys Private Limited (“Nevatia”), both located in
Bombay. The companies concerned claimed that they were not related to any other
exporting producers of the product concerned in India. Furthermore, they claimed that
they had not exported the product concerned during the original period of investigation
(l April 1997 to 31 March 1998), but had exported the product concerned to the
Community since then.

1 OJ L 288, 21.10.1997, p. 1.
2 OJ L 189, 22.7.1999, p. 1.

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2.

(3)

3.

(4)

4.

(5)

5.

(6)

6.

(7)

(8)

(9)

Initiation of an accelerated review

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
the basic Regulation. After
accordance with the provisions of Article 20 of
consultation of the Advisory Committee and after the Community industry concerned
had been given the opportunity to comment, the Commission initiated, by a notice in
the Official Journal3, an accelerated review of Council Regulation (EC) No 1599/1999
with regard to the companies concerned and commenced its investigation.

Product concerned

The product covered by the current review is the same product as the one under
consideration in Council Regulation (EC) No 1599/1999.

Parties concerned

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

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.

Investigation period

The investigation of subsidisation covered the period from 1 April 1998 to 31 March
1999 (hereinafter referred to as ‘the investigation period’).

Methodology

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

C. SCOPE OF THE REVIEW

As no request for a review of the findings on injury was made in this investigation,
this review was limited to subsidisation.

The Commission examined the same subsidy schemes which were analysed in the
original investigation. It was also examined whether the exporting producers 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 exporting producers had made use of any subsidy
schemes which were established after the end of the original investigation period, or
had received ad-hoc subsidies after this date.

3 OJ C 288, 9.10.1999, p. 45.

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D. RESULTS OF THE INVESTIGATION

1.

Withdrawal of request for review

(10) During the investigation, one company, Nevatia, withdrew its request

for an
accelerated review. Therefore, the investigation regarding this company shall be
terminated. Consequently, the further analysis only refers to the other request for an
accelerated review i.e. by Sindia Steels Limited.

2.

New exporter qualification

(11)

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

Furthermore, Sindia Steels Limited was able to demonstrate satisfactorily that it 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.

Accordingly, it is confirmed that Sindia Steels Limited should be considered as a new
exporter in accordance with Article 20 of the basic Regulation, since it was not
individually investigated during the original investigation for reasons other than a
refusal to co-operate with the Commission, and thus an individual countervailing duty
rate should be determined for it.

3.

Subsidisation

(12) On the basis of the information contained in the replies to the Commission’s

questionnaire, the following five schemes were investigated:

–

–

–

–

–

Passbook Scheme

Duty Entitlement Passbook Scheme

Export Promotion Capital Goods Scheme

Export Processing Zones/Export Oriented Units

Income Tax Scheme

4.

Passbook scheme (PBS)

(13)

Sindia Steels Limited had not availed itself of the Passbook scheme, which on 1 April
1997, i.e. during the original investigation period, was abolished and replaced by its
successor, the Duty Entitlement Passbook Scheme (DEPB).

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5.

Duty Entitlement Passbook Scheme (DEPB)

General

(14)

It was established that Sindia Steels Limited had received benefits under this scheme.
This company made use of the DEPB on a post-export basis.

(15)

(16)

Under this scheme, any eligible exporter can apply for credits which are calculated as
a percentage of the value of exported finished products. Such DEPB rates have been
established by the Indian authorities for most products,
including the products
concerned, on the basis of the Standard Input/Output Norms (SION). 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 the importation of which
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.

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

Calculation of the subsidy amount

It was established that Sindia Steels Limited did not use the licences to make duty-free
imports. Instead this company sold some of its licences, and the benefit was calculated
on the basis of the amount of credit in the licence regardless of the sale price of the
licence. The company claimed that the benefit should be limited to the effective sale
price of the licence which is often less than the face value of the credits in the licence.
However, in accordance with the findings in the initial investigation (Commission
Regulation (EC) N° 618/1999, recital 344 as confirmed by Council Regulation (EC)
No 1599/1999), 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.

As in the original investigation, the total value of the subsidy has been allocated over
total exports in the investigation period. Where the company made duly substantiated
claims for deductions linked to the payment of fees for obtaining the DEPB Licence,
these were granted.

Sindia Steels Limited benefited from this scheme during the investigation period and
obtained subsidies of 15,5 %.

4 OJ L 79, 24.3.1999, p. 25.

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6.

Export Promotion Capital Goods scheme (EPCGS)

General

(17)

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

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

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

An application fee is payable to obtain a licence.

(18)

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 GOI, government revenue otherwise due being 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
therefore deemed to be specific and
countervailable.

to export goods, and is

Calculation of the subsidy amount

(19) Using the same calculation methodology as in the original investigation, the benefit to
the exporter has been calculated on the basis of the amount of unpaid customs duty
due on imported capital goods by spreading this amount across a period which reflects
the normal depreciation of such capital goods in the industry of the product concerned.
This period has been established by using the weighted average (on the basis of
production volume of the products concerned) of depreciation periods for capital
goods actually imported under the EPCGS by Indian producers during the original
investigation period, resulting in a normal depreciation period of 15,5 years. This
amount has then been allocated over total exports during the investigation period.

(20)

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

7.

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

(21)

It was established that Sindia Steels Limited was not located in an EPZ and was not an
EOU.

8.

Income tax exemption scheme (ITES)

(22)

It was established that Sindia Steels Limited had not availed itself of the ITES.

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9.

Other schemes

(23)

It was established that Sindia Steels Limited had neither made use of new subsidy
schemes which were established after the end of the original investigation period, nor
had it received any ad-hoc subsidies after this date.

10.

Amount of countervailable subsidies

(24)

Taking account of the definitive findings relating to the various schemes as set out
above, the amount of countervailable subsidies for Sindia Steels Limited is as follows:

DEPB

EPCGS

TOTAL

Sindia Steels Ltd.

15,5 %

0,3 %

15,8 %

E. AMENDMENT OF THE MEASURES BEING REVIEWED

(25) Based on the findings made during the investigation, it is considered that imports into
the Community of stainless steel wire having a diameter of 1mm or more produced
and exported by Sindia Steels Limited should be subject to a level of countervailing
duty corresponding to individual amounts of subsidies established for this company.

(26) Council Regulation (EC) No 1599/1999 should therefore be amended accordingly.

F. DISCLOSURE AND DURATION OF THE MEASURE

(27)

The company concerned has been informed on the facts and considerations on the
basis of which it is intended to propose the amendment of Council Regulation (EC) No
1599/1999, and was given the opportunity to comment. No comments were received.

(28)

The review carried out does not affect the date on which Council Regulation (EC) No
1599/1999 will expire pursuant to Article 18(1) of the basic Regulation.

HAS ADOPTED THIS REGULATION:

Article 1

In Article 1(2) of Council Regulation (EC) No 1599/1999,

the following shall be inserted into the table :

Rate of duty
%

Taric additional code

15.8

A285

Producer

- Sindia Steels Limited

53/9 AB. Samitha complex,
Off Andheri Kurla Road
Safeed Pool, Andheri (East),
MUMBAI 400072, India

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Article 2

The accelerated review of Council Regulation (EC) No 1599/1999 concerning imports by
Nevatia Steel & Alloys Private Limited of stainless steel wires with a diameter of 1mm or
more originating in India is hereby terminated.

Article 3

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

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

Done at Brussels,

For the Council
The President

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