Council Regulation (EC) No 1338/2002 of 22 July 2002 imposing a definitive countervailing duty and collecting definitively the provisional countervailing duty imposed on imports of sulphanilic acid originating in India
Date: 2002-07-22
Institutions: Council of the European Union
Subjects: India, chemical product, countervailing charge, import, monetary compensatory amount, originating product

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Official Journal of the European Communities

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I

(Acts whose publication is obligatory)

COUNCIL REGULATION (EC) No 1338/2002

of 22 July 2002

imposing a definitive countervailing duty and collecting definitively the provisional countervailing
duty imposed on imports of sulphanilic acid originating in India

THE COUNCIL OF THE EUROPEAN UNION,

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 Community (1), and in
particular Article 15 thereof,

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

Whereas:

(1)

(2)

(3)

(4)

A. PROVISIONAL MEASURES

The Commission by Regulation (EC) No 573/2002 (2)
(‘provisional Regulation’) imposed a provisional counter-
vailing duty on imports of sulphanilic acid originating in
India. The Commission by Regulation (EC) No 575/
2002 (3)
(‘provisional anti-dumping Regulation’) also
imposed a provisional anti-dumping duty on imports of
sulphanilic acid originating in the People's Republic of
China and in India.

B. SUBSEQUENT PROCEDURE

Subsequent to the disclosure of the essential facts and
considerations on the basis of which it was decided to
impose a provisional countervailing duty, a number of
interested parties submitted comments in writing. All
interested parties who requested a hearing were granted
an opportunity to be heard by the Commission.

The Commission continued to seek and verify all infor-
mation deemed necessary for the definitive findings.

the essential

All parties were informed of
facts and
considerations on the basis of which it was intended to
recommend the imposition of a definitive countervailing
duty and the definitive collection of amounts secured by
way of the provisional countervailing duty. They were
also granted a period within which they could make
representations subsequent to this disclosure.

(5)

The oral and written arguments submitted by the parties
were taken into account.

(1) OJ L 288, 21.10.1997, p. 1.
(2) OJ L 87, 4.4.2002, p. 5.
(3) OJ L 87, 4.4.2002, p. 28.

(6)

(7)

(8)

Having reviewed the provisional findings on the basis of
the information gathered since then, the main findings
as set out in the provisional Regulation are confirmed.

C. PRODUCT CONCERNED AND LIKE PRODUCT

1. Product concerned

Subsequent to the publication of the provisional Regula-
tion, a number of interested parties claimed that the
definition of the product concerned was incorrect. They
argued that the technical and purified grades of sulpha-
nilic acid were substantially different in terms of their
purity and had different properties and applications. It
was claimed that the two grades of sulphanilic acid
could not be considered as a homogeneous product and
should therefore have been treated as distinct products
for the purposes of the investigation. In support of this
assertion, it was argued that there was insufficient inter-
changeability between the two grades of sulphanilic acid.
Whilst it was accepted that the purified grade could be
used in all applications, the same could not be said of
technical grade sulphanilic acid because of the level of
impurities it contained, most notably aniline residues.
These impurities consequently made technical grade
sulphanilic acid unsuitable for use in the production of
optical brighteners and food dyes.

It is recalled that purified grade sulphanilic acid results
from the purification of technical grade sulphanilic acid
in a process which removes certain impurities. This puri-
fication process does not alter the molecular properties
of the compound or the way in which it reacts with
other chemicals. Therefore, technical and purified grades
share the same basic chemical characteristics. The fact
that interchangeability may only be in one direction in
some applications because of concerns about impurities
is therefore not considered to be sufficient justification
that purified and technical grades constitute different
products which should be treated separately in two
different investigations. Whilst accepting that the purifi-
cation process adds certain additional costs to the
production process, it is recalled that these were taken
into account when making a fair comparison between
the different grades produced by the Community
industry
country
concerned for the purposes of calculating the level of
price undercutting and the injury elimination level.

imported from the

and those

(9)

Consequently, it was not considered that the comments
made by interested parties concerning the definition of
the product concerned were sufficient to alter the find-
ings on this issue that had been reached at the provi-

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sional stage. It is therefore definitively concluded that
both grades of sulphanilic acid should be treated as one
single product
the present
proceeding.

the purpose of

for

2. Like product

(10) No new elements were brought to the attention of the
Commission that would lead it to alter the conclusions
reached at the provisional stage, namely that sulphanilic
acid produced and sold by Community producers and
that produced in India and exported to the Community
are like products.

(11)

The provisional findings concerning the like product as
set out in recital 13 of the provisional Regulation are
hereby confirmed.

D. SUBSIDY

(12)

findings made

in the provisional Regulation
The
concerning the countervailable subsidies obtained by the
exporting producers are hereby confirmed, unless it is
otherwise expressly stated bellow.

(16)

Pursuant to Article 2(1)(a)(ii) of the basic Regulation, it is
concluded that this scheme involves a financial contribu-
tion by the GOI since government revenue (i.e. import
duties on imports) otherwise due is not collected. There
is also a benefit conferred, within the meaning of Article
2(2) of the basic Regulation, to the recipient since the
exporting producers were relieved of having to pay
normal import duties. The DEPB subsidy is contingent
upon export performance and is thus countervailable
under Article 3(4) of the basic Regulation unless one of
the exceptions provided for by the basic Regulation
applies.

(17) Article 2(1)(a)(ii) provides for such an exception for, inter
alia, drawback and substitution drawback schemes
which conform to the strict rules laid down in Annex I
item (i), Annex II (definition and rules for drawback) and
Annex III (definition and rules for substitution draw-
back).

1. Export Processing Zones (EPZ)/Export Oriented

Units (EOU)

(13) No new comments were received under this heading.
The findings as set out in recitals 18 to 28 of the
provisional Regulation are hereby confirmed.

(18)

2. Duty Entitlement Passbook Scheme (DEPB) —

post-export

(14)

The Government of India (‘GOI’) claimed that the Agree-
ment on subsidies and countervailing measures (ASCM)
is infringed both in spirit and letter by the Commission
not investigating the practical utilisation of the DEPB in
each case. They argued that the Commission's assess-
ment of the benefits under these schemes was incorrect
since only the excess duty drawback could be considered
a subsidy in accordance with Article 2 of Regulation
(EC) No 2026/97 (‘basic Regulation’). Therefore, in order
to establish whether a subsidy exists, an examination as
to whether an excess exists must be undertaken.

(15)

The Commission used the following approach in order
to establish whether
the DEPB on post–exportbasis
constitutes a countervailable subsidy and if so, to calcu-
late the amount of benefit.

The analysis revealed that DEPB on post-export basis is
not a drawback or a substitution drawback scheme. This
scheme lacks a built-in obligation to import only goods
that are consumed in the production of the exported
goods (Annex II of the basic Regulation) which would
ensure that the requirements of Annex I item (i) were
met. Additionally, there is no verification system in place
to check whether the imports are actually consumed in
the production process.
It is also not a substitution
drawback scheme because the imported goods do not
need to be of the same quantity and characteristics as
the domestically sourced inputs that were used for
export production (Annex III of the basic Regulation).
Lastly, exporting producers are eligible for the DEPB
benefits regardless of whether they import any inputs at
all. In order to obtain the benefit, it is enough for an
exporter to simply export goods without showing that
any input material was
imported. Thus, exporting
producers which procure all of their inputs locally and
do not import goods which can be used as inputs are
still entitled to the DEPB benefits. Hence, the DEPB on
post-export basis does not conform to any of the provi-
sions of Annexes I to III. Since the above exception to
the subsidy definition does not
the
countervailable benefit is the remission of total import
duties normally due on all

therefore apply,

imports.

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(19)

From the above it clearly follows, according to the basic
Regulation, that the excess remission of import duties is
the basis for calculating the amount of the benefit only
in the case of bona fide drawback and substitution draw-
back schemes. Since it is established that the DEPB on
in one of these two
post-export basis does not fall
categories, the benefit is the total remission of import
duties, not any supposed excess remission, since all duty
remission is deemed to be in excess in such cases.

(20)

For the above reasons, the claim of the GOI cannot be
accepted and the provisional
findings regarding the
countervailability of this scheme and the calculation of
the benefit, as set out in recitals 35 to 40 of the provi-
sional Regulation, are confirmed.

3. Income Tax Exemption Scheme (ITES)

(21)

The cooperating company claimed that when calculating
the benefit under this scheme, the actual amount of tax
paid by the company was not fully taken into account
because only the Minimum Alternative Tax (MAT) was
included in the original calculation and not the prepaid
income taxes of previous years.

(22)

This claim was found to be valid. The benefit to the
company was recalculated and was found to be negli-
gible.

4. Advance Licence — Advance Release Orders

(ARO) Scheme

(23)

(24)

The GOI submitted that the ARO is merely a legitimate
extension of a legitimate substitution drawback scheme
(Advance Licence). According to the GOI this is proved
by the fact that there is an unbreakable link between the
licences gained (even if subsequently exchanged for
AROs) and the importation of the necessary inputs for
the manufacture of exported goods. Furthermore, the
system is organised and administered by the GOI in such
a way as to prevent there being any possibility of excess
drawback occurring.

In this respect, the GOI argued that a substitution draw-
back scheme does not require that a company obtaining
duty drawback benefits against imported inputs need
consume those exact inputs in the production of the
relevant exported goods. According to the GOI,
the
company may consume domestically procured inputs in
the manufacture of the exported product provided they
are consumed in equivalent volumes as the inputs on
which the benefit of remission of import duty is taken.
The GOI further argued that a user of an ARO may only
exchange it
(procured indige-
nously) indicated on the advance licence and that the
advance licence was obtained by reference to an

for the input product

exported product which has already consumed a
matching quantity of the same input.

(25) When addressing these arguments, it should be recalled
that advance licences are available to exporters (manu-
facturer-exporters or merchant-exporters)
to enable
them to import
inputs used in the production of
exports, duty-free. The advance licences measure the
units of authorised imports either in terms of
their
quantity or in terms of their value. In both cases the
rates used to determine the allowed duty free purchases
are established, for most products including the product
covered by this investigation, on the basis of
the
Standard Input Output Norms (SION). The input items
specified in the advance licences are items used in the
production of the relevant exported finished product.

(26)

(27)

(28)

The advance licence holder intending to source the
inputs from indigenous sources, in lieu of direct import,
has the option to source them against AROs. In such
cases the advance licences are validated as AROs and are
endorsed to the supplier upon delivery of the items
specified therein. In accordance with the ‘export and
import policy’ document, the endorsement of the ARO
entitles the supplier to the benefits of deemed export
such as deemed exports drawback and refund of
terminal excise duty.

In this case, the cooperating company made very limited
use of advance licences to import duty-free inputs.
Instead, the company converted the licences into AROs
and endorsed them to local suppliers obtaining commer-
the AROs
cial benefits. The commercial benefits of
correspond to the amount of duties that
the AROs
enable the supplier to forgo under the deemed export
drawback facility.

It
is acknowledged that duty drawback systems can
allow for the refund or drawback of import charges on
inputs which are consumed in the production process of
the latter
another product and where the export of
product contains domestic inputs having the same
quality and characteristics as those substituted for the
imported inputs. It would for instance be allowed for a
company, in case of a shortage of duty-free inputs, to
use domestic inputs and incorporate these in the
exported goods, and then, at a later stage, import the
corresponding quantity of duty-free inputs.
In this
context, the existence of a verification system or proce-
dure is important because it enables, in this case, the
GOI to ensure and demonstrate that the quantity of
inputs for which drawback is claimed does not exceed
the quantity of similar products exported, in whatever
form, and that there is not drawback of import charges
in excess of those originally levied on the imported
inputs in question.

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(29) As stated in the provisional Regulation, the verification
established that there was no system or procedure in
place to confirm whether and which inputs, sourced
against AROs, are consumed in the production process
of the exported product or whether an excess benefit of
import duties occurred within the meaning of item (i) of
Annex I and Annexes II and III of the basic Regulation.
In particular, the exporter is under no obligation to
actually consume the inputs sourced against AROs in
the production process. Since the remission of import
duties is not limited to that payable on goods consumed
in the production process of the exported products, the
condition that only goods actually consumed in the
production process of
the exported products may
benefit from such remission is not fulfilled. It is there-
fore concluded that the ARO element of the Advance
Licence scheme is not a permitted remission/drawback
scheme within the meaning of the basic Regulation.

(30)

In addition, the AROs cannot be considered as a duty
drawback scheme, since there appears to be no require-
ment of importing inputs. In this context, a scheme
could only be considered as a bona fide duty drawback
i.e.
scheme in cases where an import element exists,
when there is a link between the imported inputs and
the exported goods. The quantity of imported inputs
should be corresponding to exported goods.

the following factors:

taged on the basis of neutral and objective criteria which
must be clearly spelled out by law or other official
document. These criteria shall include a measurement of
economic development which shall be based on at least
one of
income per capita, or
household income per capita, or GDP per capita (in each
case, not above 85 % of the average for the territory of
the country of origin or export concerned), or unem-
ployment rate as measured over a three-year period (at
least 110 % of
the
country of origin or export concerned).

the average for the territory of

(35)

The Government of Maharashtra has in a letter to the
Ministry of Commerce and Industry of the GOI stated
that the PSI applies to the entire contiguous region
outside the relatively advanced region comprised in the
Mumbai-Thane belt of the State of Maharashtra, and that
the disadvantaged region outside this belt is character-
ised by a per capita income which is below the State
average. Figures were provided which showed that per
capita income for the region to which the PSI applies
was 74,54 % of the figure for the whole Maharashtra
State in 1982/83 and 74,81 % by 1998/99. However,
these figures were not
substantiated by supporting
evidence.

(31)

For the above reasons, these claims cannot be accepted
and the provisional findings as regards the countervail-
ability of this scheme and the calculation of the benefit
are confirmed.

(36)

5. Package Scheme of

Incentives

(PSI) of

the

Government of Maharashtra

(32) As stated in the provisional Regulation, the PSI scheme
is only available to companies having invested in certain
designated geographical areas within the jurisdiction of
the State of Maharashtra. It is not available to companies
located outside these areas. The level of the benefit is
different according to the area concerned. The scheme is
therefore specific in accordance with Article 3(2)(a) and
Article 3(3) of the basic Regulation.

(33)

The GOI and the company concerned claimed that this
scheme is a non-countervailable subsidy since it meets
the criteria of Article 4(3) of the basic Regulation, and
thus qualifies as a ‘green-light’ regional subsidy granted
within the State of Maharashtra.

(34) Under this Article, in order not to be subject to counter-
vailing measures, subsidies to disadvantaged regions
within the territory of
the country of origin and/or
export would have to comply with certain criteria; most
notably, they would have to be: (i) pursuant to a general
framework of regional development,
the regions
concerned would have to be clearly designated contig-
uous geographical areas with a definable economic and
administrative identity, and (iii) be regarded as disadvan-

(ii)

In any event, the examination of the green-light claim
has revealed that the per capita income in the State of
Maharashtra, as measured over a period of three years
(1996/97 to 1998/99), is more than 60 % higher than
the national average of India. It should be clear that the
85 % benchmark is measured against
the per capita
income for the whole of the country of origin or export
and not that of a particular State or region. On this
basis, it is clear that the income per capita of the eligible
region in Maharashtra, although less than 85 % of the
regional average,
is well above the national average
income per capita, and the region therefore does not fall
this
into the green-light category on the basis of
criterion. As regards the unemployment criterion, no
information was provided by the Indian authorities.

(37) On the basis of the above, it is concluded that, in this
case, this scheme does not meet the criteria of Article
4(3) of the basic Regulation. The provisional findings as
regards the countervailability of this scheme are, there-
fore, confirmed.

(38)

Concerning the calculation of the subsidy amount as set
out in recitals 72 to 74 of the provisional Regulation,
the GOI and the company concerned claimed that the
amount of benefit obtained under the tax deferral incen-
tive should be allocated over the total sales during the
investigation period (‘IP’) rather than over the total
domestic sales during the IP as it was provisionally
allocated, because it is a benefit to the company as a
whole and should for this reason not solely be attributed
to its domestic sales.

(39)

(40)

(41)

(45)

(46)

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they brought

the
In addition,
Commission certain factors by which the calculations of
the benefit obtained by the company concerned under
the sales tax exemption incentive were inflated.

to the attention of

(42) On the basis of the revised calculations described above,
the amount of subsidy that the company has obtained
under this scheme is 0,8 %.

the
The claim concerning the basis of allocation of
benefit obtained under the tax deferral
incentive was
considered valid and the Commission amended the
calculations of the subsidy amount accordingly.

the comments of

In relation to the sales tax exemption incentive, after
taking into account
the interested
parties and after a detailed review of the provisional
the provisional calculations were adjusted
findings,
resulting in an overall reduction of
the amount of
subsidy.

6. Amount of countervailable subsidies

(43)

(44)

The amount of countervailable subsidies, calculated in
accordance with the provisions of the basic Regulation,
the investigated
is 7,1 %,
expressed ad valorem,
exporting producer.

for

The level of cooperation for India was high (above
80 %). In view of the high level of cooperation, it was
decided to set the residual subsidy margin at the level of
the
cooperating exporting
the
producer,

subsidy found for
i.e. 7,1 %.

Type of subsidy

EOU (*)

DEPB (*)

EPCGS

ITES

Advance
Licence/ARO
(*)

Maharashtra
State scheme

TOTAL

1,4 %

1,7 %

0

0

3,2 %

0,8 %

7,1 %

Kokan Synthetics
and
Chemicals
Private Limited

All others

(*) Subsidies marked with an asterisk are export subsidies.

E. COMMUNITY INDUSTRY

Following the publication of the provisional Regulation,
a number of interested parties queried the definition of
the Community industry and its standing in terms of
Article 10(8) of the basic Regulation. In particular, it was
suggested that the complainant producer, Sorochimie
Chime Fine, did not have the support of the second
Community producer, Quimigal S.A., when it lodged its
complaint.

it did express it support

It is recalled that whilst Quimigal was not a party to the
original complaint,
for the
proceeding at the initiation stage and has fully cooper-
ated in the investigation. In response to the claims of
certain interested parties, it has also reiterated its support
for the proceeding during the course of
the invest-
igation. Therefore, as no new elements were brought to
the attention of the Commission that would lead it to
findings
alter
concerning the definition of the Community industry
and its standing as detailed in recital 78 of the provi-
sional Regulation are hereby confirmed.

the provisional

findings,

earlier

its

F. INJURY

1. Preliminary remarks

7,1 %

findings regarding imports, in both volume and value
terms, and that consequently their rights of defence had
been impeded. It was noted that some of this informa-
tion was also missing from the public version of the
complaint with the result that the complaint did not
meet the standards detailed in Article 10(2) of the basic
Regulation.

(48)

It is to be noted that according to Article 29(1) of the
basic Regulation,
information which is submitted in
confidence by parties to an investigation shall be treated
as such by the investigation authority so long as the
It is
information concerned warrants such treatment.
recalled that sulphanilic acid is manufactured by a rela-
tively small number of producers around the world.
Consequently, it was not possible for reasons of confi-
dentiality to disclose precise information relating to
imports of the product into the Community, especially
for those countries where there is only one exporting
producer. Therefore,
for the purposes of disclosure,
indexed figures and an explanatory narrative were made
available to interested parties concerning this and related
items.

(47)

Several interested parties questioned the way in which
the Commission had established figures for imports of
sulphanilic acid into the Community, Community
consumption and market shares. They claimed that there
had been insufficient disclosure of the Commission's

(49) As none of the interested parties which raised the issue
of insufficient disclosure were able to demonstrate that
the information made available to them in a summarised
form did not enable them to defend their rights, their
arguments in this respect had to be rejected.

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2. Imports concerned

(50) One interested party suggested that the figure for the
increase in imports noted in the provisional Regulation
was misleading. It was claimed that as a number of other
producers had withdrawn from the market, users in the
Community were obliged to purchase sulphanilic acid
on the world market, thereby leading to the sharp rise in
import volumes. This claim had to be rejected for a
number of reasons. In the first instance, no additional
evidence concerning the level of imports was submitted
so as to alter the findings reached at the provisional
stage on this point. Similarly, whilst it was acknowl-
edged in recital 161 of the provisional Regulation that
imports from India were expected to continue to play a
significant role in meeting demand in the Community, it
was also noted that had the Community industry not
been subject to the injurious effects of the subsidised
it would have been able to put into effect
imports,
certain expansion plans, thereby satisfying a larger part
of Community demand. In the light of the above, the
provisional
into the
concerning
Community from India and the level of price undercut-
ting as noted in recitals 81 to 85 of the provisional
Regulation are confirmed.

findings

imports

(51)

(52)

(53)

3. Situation of the Community industry

In accordance with Article 8(5) of the basic Regulation,
the examination of the impact of the subsidised imports
on the Community industry included an evaluation of all
relevant economic factors and indices having a bearing
on its state.

Subsequent to provisional disclosure, a number of inter-
in which the
ested parties questioned the manner
Commission had reached its provisional determination
concerning injury as certain indicators were showing
positive developments. In particular,
it was suggested
that the increase in the Community industry's produc-
tion, sales and capacity utilisation during the analysis
period (1 January 1997 to 30 June 2001) proved that it
suffered injury. One interested party also
had not
claimed that
the Commission had failed to make a
proper assessment of wage costs as required by the
Article 8(5) of the basic Regulation.

(57)

It is recalled that according to Article 8(5) of the basic
Regulation, none of the economic factors or indices
listed in the aforementioned article shall necessarily be
decisive in the determination of injury. It is indeed true
that certain indicators relating to quantities produced
and sold by the Community industry showed positive
developments. However, this should be seen in the light
of the fact that Community consumption of sulphanilic
acid increased by some 13 % during the analysis period
and that there has been a reduction of the number of
suppliers on the market due to the closure of certain
Community producers.

(54) More importantly,

it

In particular,

should be recalled that

the
Community industry suffered injury in the form of price
depression and price suppression.
its
average selling price declined sharply between 1997 and
1998 as the pressure exerted by the increasing volume
of imports on the market became evident. Subsequently,
although the Community industry was able to increase
its average selling price as demand on the Community
market also increased, it failed to achieve a level which
would enable it to cover its full cost of production and
losses continued to be incurred in the IP.

(55) With regard to the argument raised concerning wages, it
is noted that although the number of workers employed
by Sorochimie decreased during the analysis period, the
average employment cost per employee increased. This
is due to the fact that there was a change in the mix of
employee during the period and also to general wage
inflation. With regard to Quimigal, it is to be noted that
in the base year for the index (1998) the company was
not producing sulphanilic acid. When it began produc-
tion in 1999, the workers were engaged full time in this
activity with an extra day being worked from 2000
the wages of
onwards. Neither company noted that
those employed in sulphanilic acid activities had been
effected by the imports concerned. Therefore, wages
were not considered to be an indicator of injury.

(56)

In view of the above, the provisional findings that the
Community industry suffered material injury within the
meaning of Article 8 of the basic Regulation, as detailed
in recitals 88 to 107 of the provisional Regulation, are
confirmed.

G. CAUSATION

1. General comments on the Commission's conclu-

sions regarding the causation of injury

Certain interested parties argued that the Community
industry was itself partly responsible for the injury it had
suffered. Several parties questioned the quality of Soro-
chimie's management, product and customer service,
and highlighted the fact it had itself imported sulphanilic
acid during the analysis period. One party also alleged
that the injury suffered by Sorochimie should be attrib-
uted to its other business activity (glue) which experi-
enced significant difficulties during the IP. With regard
the second company
to the situation of Quimigal,
forming part of the Community industry, it was argued
that its decision to enter the market with a low price
strategy during its start-up phase had also contributed to
the alleged injury. Finally, it was also claimed that the
Community industry had to meet stringent environ-
mental regulations and had higher labour and transport
costs than exporting producers in India with the impli-
cation that imports originating in that country had a
competitive advantage and were not made at injurious
prices.

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(58)

(59)

The investigation showed that Sorochimie, despite its
financial difficulties linked to the excessively low prices
prevailing on the market, was able to gain new
customers during the analysis period and to adapt its
products to meet their needs. The company was obliged
to purchase certain quantities of the product concerned
during the analysis period in order to meet existing
customer requirements while its production equipment
was undergoing essential repairs.
thus be
considered that Sorochimie contributed to its own
injury. Similarly, it is recalled that any exceptional costs
relating to the company's difficulties in its glue business
have been excluded from the current investigation as
they are not linked to the product concerned and thus
are not reflected in the injury indicators described in the
provisional Regulation.

It cannot

It was noted in recital 118 of the provisional Regulation
that Quimigal's decision to enter the market was taken
at a time when prices for sulphanilic acid on the
Community market were higher. Quimigal was able to
establish itself on the market at a time of both increasing
demand in the Community and changes in the number
of suppliers of sulphanilic acid both in the Community
and outside. It was also noted that the company was
obliged to offer prices similar to those of the dumped
and subsidised imports in order to establish itself on the
market and gain market share in 1999 and 2000 in that
its relatively small size meant that it was a price taker
rather than a price setter. Nevertheless, its market share
decreased slightly in the IP as imports from India
increased in volume. No indication has therefore been
the
found that
intra-
industry
Community
Community industry competition.

the deterioration of
due

the situation of
to excessive

is

(60) With regard to the allegedly higher costs that

the
Community industry is obliged to meet in terms of
complying with environmental regulations and other
items, it should be recalled that the competitive advan-
tage of the imports concerned was taken into account in
the determination of normal value. Consequently, the
provisional findings concerning causation as set out in
recitals 121 to 123 of the provisional Regulation are
confirmed.

(61)

H. COMMUNITY INTEREST

It

Following the publication of the provisional Regulation,
one interested party questioned how the Commission
could determine,
in the light of Sorochimie being in
administration, that the Community industry was viable
is recalled that Sorochimie was
and competitive.
obliged to seek protection from its creditors following
certain difficulties in its glue business and other pres-
sures in its sulphanilic acid activities. The Commercial
Court of Charleville Mézières has appointed an adminis-
trator to oversee the company's trading activities and has
granted the company a period of time in which to
prepare a restructuring plan. This period of time has
recently been extended until 31 January 2003. In the
absence of other unforeseen events, the company should
continue to be in existence for the immediate future and
therefore be in a position to benefit from the imposition
of definitive measures. Consequently,
the provisional
findings that
the imposition of measures is in the
interest of the Community industry as noted in recital
134 of the provisional Regulation are confirmed.

(62) A number of

interested parties claimed that

the
Commission had failed to make an objective assessment
of the situation of users in not taking into account any
increase in the Community industry's prices that would
likely follow the imposition of measures. It was also
the Community
claimed that measures were against
interest as the production capacity of the Community
industry was insufficient to meet Community demand
and as a possible duopolistic situation based on the two
Community producers could result from the closure of
the market to imports from India and also from the
PRC, which is itself subject to the parallel anti-dumping
investigation.

(63)

(64)

In respect of the claim that the Commission failed to
take account of the various interests in an objective
manner when determining the imposition of measures,
it is recalled that at the provisional stage, the Commis-
sion made a detailed analysis of each of the main user
sectors (optical brighteners, concrete additives, dyes and
colorant producers). This analysis included an assess-
ment of the impact of measures on their costs on the
basis that the prices of the imports concerned would
increase in line with the proposed measures. At the same
time, due allowance was made in this calculation for a
maximum possible increase in the price of sulphanilic
acid sold by the Community industry of 10 % on the
basis that its prices would increase to a level similar to
that of the imports concerned following the imposition
of measures taking into account that it was already
operating at a fairly high rate of capacity utilisation in
the IP. As such, no new elements were submitted by
interested parties which would alter the provisional find-
ings concerning the possible increase in the manufac-
turing costs of the different user industries.

Regarding the supply and competition situation on the
Community market, it is to be noted that the current
production capacity of the Community industry could
satisfy in the region of 50 % of Community demand.
The purpose of the measures is in any event not to close
the market to imports from India but to ensure that they
are made at non-subsidised and non-injurious prices. It
is therefore expected that imports from third countries
including India will continue to enter the market. At the
same time, measures should ensure continued sulpha-
nilic acid production in the Community with the result
that users will have more choice between domestic and
foreign suppliers and competition between all suppliers
should be maintained. It should also be stressed that the
Community industry has plans to increase its output by
investing in new facilities if the capital expenditure can
be justified. For this to occur, the injurious effects of the
subsidised imports need to be removed.

(65)

In the light of the above, the provisional findings that
the imposition of measures is not contrary to the
interest of the Community as noted in recital 164 of the
provisional Regulation is confirmed.

I. ANTI-SUBSIDY MEASURES

1. Injury elimination level

(66)

In the absence of any new submissions on this point, the
methodology used to establish the injury margin as set
out at recitals 165 to 167 of the provisional Regulation
is hereby confirmed.

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2. Definitive measures

product concerned presented to customs, the appro-
priate rate of countervailing duty should instead be
payable.

(67) As the injury elimination level is higher than the subsidy
margin established, the definitive measures should be
based on the latter. The following duty therefore applies:

India (all companies): 7,1 %.

(72)

It should be noted that 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 Regulation,

3. Definitive collection of provisional duties

HAS ADOPTED THIS REGULATION:

(68)

In view of the magnitude of subsidisation found and in
the light of the seriousness of the injury caused to the
Community industry, it is considered necessary that the
amounts secured by way of the provisional counter-
vailing duty shall be definitively collected at the rate of
the duty definitively imposed. Amounts secured under
the provisional duty in excess of the definitive duty shall
be released.

J. UNDERTAKING

(69)

Subsequent to the imposition of provisional measures,
the sole cooperating exporting producer in India offered
a price undertaking in accordance with Article 13(1) of
the basic Regulation. By doing so, it agreed to sell the
product concerned at or above price levels which would
have the effect of eliminating the injurious effects of
subsidisation. The company will also provide the
Commission with regular and detailed information
concerning its exports to the Community, meaning that
the undertaking can be monitored effectively by the
Commission. Furthermore,
the
the Commission
exporting producer
considers that
the risk of circumventing the agreed
undertaking is limited.

the sales structure of

such that

is

(70)

In view of this, the offer of an undertaking was accepted
by the Commission in Decision 2002/611/EC (1).

(71)

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 to
the relevant customs authority, exemption from the duty
should be conditional upon presentation of a commer-
cial
invoice containing the information listed in the
Annex to this Regulation. Where no such invoice is
presented, or when it does not correspond to the

(1) See page 36 of this Official Journal.

Article 1

1.
A definitive countervailing duty is hereby imposed on
falling within CN code
acid,
imports of
ex 2921 42 10 (TARIC code 2921 42 10*60) and originating
in India.

sulphanilic

The rate of the definitive countervailing duty applicable
2.
to the net, free-at-Community-frontier price, before duty shall
be 7,1 %.

3.
Notwithstanding paragraph 1, the definitive duty shall
not apply to imports released for free circulation in accordance
with Article 2.

4.
Unless otherwise specified,
concerning custom duties shall apply.

the provisions

in force

Article 2

Imports under

the following TARIC additional code
1.
which are produced and directly exported (i.e. shipped and
invoiced) by the company named below to a company in the
Community acting as an importer shall be exempt from the
countervailing duty imposed by Article 1 provided that they
are imported in conformity with paragraph 2.

Country

Company

India

Kokan Synthetics & Chemicals Pvt
Ltd,
14 Guruprasad, Gokhale Road (N),
Dadar (W),
Mumbai 400 028, India

TARIC
additional code

A398

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L 196/9

Imports mentioned in paragraph 1 shall be exempt from

2.
the duty on condition that:

(i) a commercial invoice containing at least the elements of
the necessary information listed in the Annex is presented
to Member States customs authorities upon presentation of
the declaration for release into free circulation; and

Article 3

The amounts secured by way of the provisional countervailing
duty imposed pursuant to Regulation (EC) No 573/2002 shall
be definitively collected at
the rate of duties definitively
imposed. Amounts secured in excess of the definitive rate of
countervailing duty shall be released.

Article 4

(ii) the goods declared and presented to customs correspond
invoice.

precisely to the description on the commercial

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

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

Done at Brussels, 22 July 2002.

For the Council

The President

P. S. MØLLER

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Official Journal of the European Communities

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ANNEX

Elements to be indicated in the commercial invoice referred to in Article 2(2)

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

2. The name of the company mentioned in Article 2(1) 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 fron-

tier.

6. The exact description of the goods, including:

— the Product Code Number (PCN), i.e. ‘PA99’, ‘PS85’ or ‘TA98’,

— the technical/physical specifications of the PCN, i.e. for ‘PA99’ and ‘PS85’ white free-flowing powder and for

‘TA98’ grey free-flowing powder,

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

— 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 company 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 Kokan Synthetics & Chemi-
cals Pvt Ltd, 14 Guruprasad, Gokhale Road (N), Dadar (W), Mumbai 400 028, India, and accepted by the European
Commission through Decision 2002/611/EC. I declare that the information provided on this invoice is complete and
correct.’