Commission Decision No 842/2002/ECSC of 21 May 2002 amending Decision No 284/2000/ECSC imposing a definitive countervailing duty on imports of certain flat rolled products of iron or non-alloy steel, of a width of 600 mm or more, not clad, plated or coated, in coils, not further worked than hot-rolled, originating, inter alia, in India and accepting an undertaking
Date: 2002-05-21
Institutions: European Commission
Subjects: India, countervailing charge, flat product, import, originating product, plate

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COMMISSION DECISION No 842/2002/ECSC

of 21 May 2002

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

THE COMMISSION OF THE EUROPEAN COMMUNITIES,

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

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

After consulting the Advisory Committee,

Whereas:

(1)

(2)

(3)

(4)

A. PREVIOUS PROCEDURE

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

B. CURRENT PROCEDURE

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

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

The Commission examined the evidence submitted by
the companies and considered it sufficient to justify the
initiation of a review in accordance with the provisions

of Article 20 of the Basic Anti-subsidy Decision. After
consultation of the Advisory Committee and after the
Community industry concerned had been given the
opportunity to comment, the Commission initiated, by a
notice in the Official Journal (3), an accelerated review of
Decision No 284/2000/ECSC with regard to the compa-
nies and commenced its investigation.

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

The Commission sent questionnaires to the companies
and received replies within the deadline. The Commis-
sion also sought and verified all the information deemed
necessary for the determination of subsidisation. Verifi-
cation visits were carried out at the premises of the
companies.

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

C. RESULTS OF THE INVESTIGATION

1. NEW EXPORTER QUALIFICATION

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

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

(5)

(6)

(7)

(8)

(9)

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

(1) OJ L 245, 4.9.1998, p. 3.
(2) OJ L 31, 5.2.2000, p. 44.

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

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2. SUBSIDISATION

1. Introduction

(11) On the basis of the information contained in the replies
to the Commission's questionnaire, the following five
schemes were investigated:
— Passbook Scheme (PBS),
— Duty Entitlement Passbook Scheme (DEPBS),
— Export Promotion Capital Goods Scheme (EPCGS),
(EPZ)/Export Oriented
— Export Processing Zones

Units (EOU),

— Income Tax Exemption Scheme (ITES).

2. Passbook scheme (PBS)

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

3. Duty Entitlement Passbook Scheme (DEPBS)

General

(13)

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

(14) Under this scheme, any eligible exporter can apply for
credits which are calculated as a percentage of the value
of exported finished products. Such DEPB rates have
been established by the Indian authorities for most 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.

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

(16)

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

Calculation of the subsidy amount

(17)

It was established that Ispat Industries Limited used the
DEPB licences to make duty-free imports. The benefit
was therefore calculated on the basis of
the import
duties otherwise payable. In addition, this company sold
some of its licences, and in these cases the benefit was

(18)

(19)

(20)

(21)

(22)

calculated on the basis of the amount of credit stated in
the licence regardless of the sales price of the licence.
The sale of a licence at a price less than the face value is
a purely commercial decision which does not alter the
countervailable benefit
from this scheme. Using the
same calculation methodology as in the original invest-
igation, the total amount of the licences used for duty-
free imports and those that have been sold, has been
allocated over total exports in the investigation period.
Where the company claimed deductions linked to the
payment of fees for obtaining the DEPB Licence, these
were granted.

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

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

4. Export

Promotion Capital Goods

scheme

(EPCGS)

General

It was established that both companies had availed
themselves of this scheme. To benefit from the scheme,
a company must provide, to the relevant authorities,
details of the type and value of capital goods which are
to be imported. Depending on the level of export
commitment which the company is prepared to under-
take, 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 obliga-
tion, goods exported must have been produced using the
imported capital goods. An application fee is payable to
obtain a licence.

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

is

subsidy

contingent

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

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Calculation of the subsidy amount

for India by the definitive countervailing Decision, i.e.
23,8 %.

(23) Using the same calculation methodology as in the orig-
inal 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 depre-
ciation 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 invest-
igation period, resulting in a normal depreciation period
of 18 years.

(24)

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

5. Export Processing Zones (EPZ)/Export Oriented

Units (EOU)

(25)

The Commission established that neither of the compa-
nies was located in an EPZ or was an EOU, and that they
therefore did not receive any benefits under this scheme.

6. Income tax exemption scheme (ITES)

(26)

It was established that neither of
concerned had availed themselves of the ITES.

the companies

7. Other schemes

(27)

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.

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

(30)

(31)

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

In the case in question, the schemes investigated in India
have been found to constitute export subsidies within
the meaning of Article 3(4)(a) of the Basic Anti-subsidy
Decision. As such, the subsidies affect the normal value
or export prices of the Indian exporting producers, thus
leading to increased margins of dumping.
In other
words, the dumping margin established is wholly or
partly due to the existence of export subsidies. In these
circumstances the rates of anti-dumping duty established
in Commission Decision No 283/2000/ECSC (1)
(‘the
for the companies
definitive Anti-dumping Decision’)
need to be adjusted to reflect
the actual dumping
margin, or injury margin if lower, which remains after
the imposition of the countervailing duties offsetting the
effect of the export subsidies.

D. AMENDMENT OF THE MEASURES BEING REVIEWED

(28)

In the light of the foregoing, it is considered that defin-
itive countervailing duties should be imposed at the level
of the amount of subsidy found, but should not be
higher than the country-wide injury margin established

(32) Accordingly,

the rates of countervailing and anti-
dumping duty applicable to the free-at-Community-fron-
tier price, before duty and taking into account the results
of the parallel anti-dumping and countervailing proceed-
ings, shall be:

Company

Dumping margin

Injury margin

Export subsidy
margin

Countervailing
duty

Ispat Industries Ltd

Jindal Vijayanagar
Steel Ltd

46,5

56,3

23,8

23,8

9,8

5,7

9,8

5,7

(in %)

AD duty

14

18,1

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

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(33)

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

E. UNDERTAKING

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

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

(36)

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

(37)

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

(38)

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

F. DISCLOSURE AND DURATION OF THE MEASURES

(39)

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

(40)

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

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HAS ADOPTED THIS DECISION:

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

1. In the table in Article 1(2), the section headed ‘India’

is replaced by the following:

Article 1

Company

Rate of CVD duty
(%)

TARIC additional code

‘Ispat Industries Ltd, “Park Plaza”, 71 Park Street, Calcutta —
700 016, India

Jindal Vijayanagar Steel Ltd, Jindal Mansion, 5-A. G. Deshmukh
Marg, Mumbai — 400 026, India

Essar Steel Ltd, 27 KM, Surat Hazira Road, Hazira 394270, Dist:
Surat, State: Gujarat

Steel Authority of India Limited, Ispat Bhavan, Integrated Office
Complex, Lodhi Road, New Delhi — 110 003

Tata Iron & Steel Company Limited, 43 Chowringhee Road,
Calcutta 700 071

All other companies

9,8

5,7

4,9

12,3

6,2

13,1

A204

A270

A076

A077

A078

A999’

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

‘Ispat Industries Ltd, “Park Plaza”, 71 Park Street, Calcutta — 700 016 India

A204’

Company

Taric additional code

3. In Article 2(2), the reference to an ‘undertaking invoice’

is replaced by ‘Commercial Invoice’.

1.

2.

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

Article 2

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

Article 3

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

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

Done at Brussels, 21 May 2002.

For the Commission

Pascal LAMY

Member of the Commission

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ANNEX

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

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

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

3. The Commercial Invoice number.

4. The date of issue of the Commercial Invoice.

5. The TARIC additional code under which the goods on the invoice are to be customs-cleared at the Community frontier

(as specified in the Decision).

6. The exact description of the goods,

including:

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

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

— the technical specification of the PCN,

— CN code,

— quantity (to be given in tonnes).

7. The description of the terms of the sale,

including:

— price per tonne,

— the applicable payment terms,

— the applicable delivery terms,

— total discounts and rebates.

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

9. The name of the official of the company that has issued the commercial invoice and the following signed declaration:

‘I, the undersigned, certify that the sale for direct export to the European Community of the goods covered by this
invoice is being made within the scope and under the terms of the undertaking offered by … (name of company), and
accepted by the European Commission through Decision (842/2002/ECSC). I declare that the information provided in
this invoice is complete and correct.’