Council Regulation (EC) No 1645/2005 of 6 October 2005 amending Regulation (EC) No 2603/2000 imposing a definitive countervailing duty on imports of certain polyethylene terephthalate originating, inter alia, in India
Date: 2005-10-06
Institutions: Council of the European Union
Subjects: India, countervailing charge, import, originating product, plastics

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I

(Acts whose publication is obligatory)

COUNCIL REGULATION (EC) No 1645/2005

of 6 October 2005

amending Regulation (EC) No 2603/2000 imposing a definitive countervailing duty on imports of
certain polyethylene terephthalate originating, inter alia, in India

THE COUNCIL OF THE EUROPEAN UNION,

1999), but had exported the product concerned to the
Community subsequently.

Having regard to the Treaty
Community,

establishing the European

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)
(the
basic Regulation), and in particular Article 20 thereof,

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

Whereas:

(1)

(2)

A. PREVIOUS PROCEDURE

The Council, by Regulation (EC) No 2603/2000 (2),
imposed a definitive countervailing duty on imports of
certain polyethylene terephthalate (PET) with a coefficient
of viscosity of 78 ml/g or higher, according to DIN
Industrienorm) 53728, normally declared
(Deutsche
within CN code 3907 60 20 and originating,
inter alia,
in India (the product concerned). The measures took the
form of a specific duty ranging between EUR 0 and 41,3
per tonne for cooperating individual
Indian exporters,
with a specific duty of EUR 41,3 per tonne for all
other Indian exporters.

B. CURRENT PROCEDURE

1. REQUEST FOR REVIEW

the
Following the imposition of definitive measures,
Commission received a request for the initiation of an
accelerated review of Regulation (EC) No 2603/2000
pursuant to Article 20 of the basic Regulation from an
Indian producer of the product concerned, South Asian
Petrochem Limited (the applicant). The applicant claimed
not to be related to any other exporter of the product
concerned. Furthermore,
it had not
exported the product concerned during the original
investigation period (1 October 1998 to 30 September

it asserted that

(1) OJ L 288, 21.10.1997, p. 1. Regulation as last amended by Regu-

lation (EC) No 461/2004 (OJ L 77, 13.3.2004, p. 12).

(2) OJ L 301, 30.11.2000, p. 1. Regulation as amended by Regulation

(EC) No 822/2004 (OJ L 127, 29.4.2004, p. 3).

(3)

(4)

(5)

(6)

(7)

2.

INITIATION OF AN ACCELERATED REVIEW

The Commission examined the evidence submitted by
the applicant and considered it sufficient to justify the
initiation of a review in accordance with the provisions
of Article 20 of the basic Regulation. 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
the European Union (3) an accelerated
Official
review of Regulation (EC) No 2603/2000 with regard
to the applicant.

Journal of

3. PRODUCT CONCERNED

The product covered by this review is the same product
as the one under consideration in Regulation (EC) No
2603/2000 (see recital 1).

4.

INVESTIGATION PERIOD

The investigation of subsidisation covered the period
from 1 October 2003 to 30 September 2004 (the
review investigation period).

5. PARTIES CONCERNED

The Commission officially advised the applicant and the
Government of India (the GOI) of the initiation of the
investigation. Furthermore, it gave other interested parties
the opportunity to make their views known in writing
and to request a hearing. However, no such views or any
request for a hearing were received by the Commission.

The Commission sent a questionnaire to the applicant
and received a full reply within the set deadline. The
information it
Commission sought and verified all
deemed necessary for the purpose of the investigation
and carried out verification visits at the premises of the
applicant in Calcutta and in Haldia.

(3) OJ C 8, 12.1.2005, p. 2.

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C. SCOPE OF THE REVIEW

(8)

The Commission examined the same subsidy schemes
which were analysed in the original
It
also examined whether
the applicant had used any
other subsidy schemes, or had received ad hoc subsidies
in relation to the product concerned.

investigation.

(9)

(10)

(11)

D. RESULTS OF THE INVESTIGATION

1. NEW EXPORTER QUALIFICATION

The applicant was able to satisfactorily demonstrate that
it was not related, directly or indirectly, to any of the
exporting producers
countervailing
subject
measures in force with regard to the product concerned.

to the

investigation,

The investigation confirmed that the applicant had not
exported the product concerned during the original
period of
from 1 October 1998 to
30 September 1999, and that it had begun exporting
to the Community after this period. Furthermore, the
individually investigated during the
applicant was not
original investigation for reasons other than a refusal to
cooperate with the Commission.

i.e.

considered as

Consequently, it is confirmed that the applicant should
be
in
accordance with Article 20 of the basic Regulation, an
individual countervailing duty rate should be determined
for the applicant.

a new exporter. Therefore,

2. SUBSIDISATION

(12) On the basis of

the information contained in the
applicant’s reply to the Commission’s questionnaire and
further collected in the course of the investigation, the
following schemes were investigated:

— Duty Entitlement Passbook Scheme,

— Export Credit Scheme,

— Export Oriented Unit Scheme/Special Economic

Zones Scheme,

— Export Promotion Capital Goods Scheme,

— Income Tax Exemption Scheme,

— West Bengal Incentives Scheme.

2.1. SCHEMES ORIGINALLY INVESTIGATED AND USED BY

THE COMPANY

2.1.1. Export Oriented Unit Scheme (EOUS)/Special

Economic Zones Scheme (SEZS)

(a) Legal basis

which entered into force on 7 August 1992 (Foreign
Trade Act). This act authorises the GOI to issue notifi-
cations regarding trade policy, formerly called ‘Export-
Import Policy’ and since 1 September 2004 named
‘Foreign Trade Policy’. The Foreign Trade Policy 2004
to 2009 (FTP), which incorporates
the Export and
Import Policy 2002 to 2007, is relevant to the review
investigation period of this case. In addition, the GOI
also sets out
the procedures governing the FTP in a
‘Handbook of Procedures Volume I’ (HOP I) (1).

(14)

The details of these schemes are contained in chapters 6
(EOUS) and 7 (SEZS) respectively of the FTP and of the
HOP I.

(b) Eligibility

(15) With the exception of pure trading companies, all enter-
prises which, in principle, undertake to export their entire
production of goods or services may be set up under the
EOUS or SEZS. However, unlike services and agriculture,
undertakings in the industrial sectors have to fulfil a
minimum investment threshold in fixed assets (INR 10
million) to be eligible for the EOUS.

(c) Practical implementation

(16)

The SEZS is the successor scheme of the former Export
Processing Zones Scheme (EPZS). SEZs are specifically
delineated duty free enclaves and considered by the FTP
as foreign territory for the purpose of trade operations,
duties and taxes. Thirty five SEZs have been approved by
the Indian authorities.

(17)

EOUs, on the other side, are geographically more flexible
and can be established anywhere in India. This scheme is
complementary to the SEZS.

(18) An application for operation under these schemes must
include details for a period of the next five years on, inter
alia, planned production quantities, projected value of
indigenous
requirements
exports,
the company’s
requirements.
the authorities accept
the terms and conditions attached to the
application,
acceptance
company. The
is communicated to the
agreement recognising the company as an undertaking
under the EOUS or SEZS is valid for a five-year period.
The agreement may be renewed for further periods.

import
If

and

(13)

These schemes are based on the Foreign Trade (Devel-
opment and Regulation) Act 1992 (No 22 of 1992)

(1) Notification No 1/2002-07 of 31.3.2002 of

the Ministry of

Commerce and Industry of the GOI.

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(19) A crucial obligation of an EOU or an SEZ enterprise as
set out in the FTP is to achieve net foreign exchange
(NFE) earnings, i.e. in a reference period (five years) the
total value of exports has to be higher than the total
value of imported goods.

the exports made. These documents must be
and of
submitted periodically, as may be required,
to the
competent authorities (quarterly and annual progress
reports).

(20)

EOUS/SEZS
concessions:

units

are

entitled

to

the

following

(i) exemption from import duties on all types of goods
and
goods,
the manufacture,
connection

for
processing,

raw materials

required

capital

or

or

in

(including
consumables)
production
therewith;

(ii) exemption from excise duty on goods procured

from indigenous sources;

(iii) reimbursement of central sales tax paid on goods

procured locally;

(24) However,

‘at no point in time [an EOU or a SEZ unit]
shall be required to co-relate every import consignment
with its exports, transfers to other units, sales in DTA or
stocks’, as paragraphs 6.11.2 and 7.13.2 of the HOP I
state.

(25) Domestic sales are dispatched and recorded on a self-
certification basis without prior intimation of specific
con-
transactions. The dispatch process of
signments of an EOU is
supervised by a customs/
excise official, who is permanently posted in the EOU.
The company is obliged to reimburse the GOI for the
salary of such permanent bond officer.

export

(iv) ‘duty drawback on all industry rates’ with regard to
furnace oil procured from domestic oil companies;

(26)

(v) facility to sell a part of

the production on the
domestic market on payment of applicable duties
on the finished product as an exception to the
general requirement to export the entire production;

(vi) exemption from income tax normally due on profits
realised on export sales in accordance with Section
10A or Section 10B of the Income Tax Act, for a
10-year period after starting their operations, but no
longer than up to 2010;

(vii) possibility of 100 % foreign equity ownership.

(21) Although the concessions under both schemes are largely
comparable, some differences exist. For instance, only an
EOU can obtain a 50 % reduction of duties payable upon
domestic sales (DTA sales), whereas in an SEZ 100 % of
the duties are payable on such sales. An EOU unit can
sell up to 50 % of
its turnover domestically at such
reduced rate.

(22) Units operating under these schemes are bonded under
the surveillance of customs officials in accordance with
Section 65 of the Indian Customs Act.

(27)

(28)

(23)

They are legally obliged to maintain,
format,
all
consumption and utilisation of all

account of

a proper

in a specified
the
imported materials

imports, of

‘All activities of SEZ units within the zone, unless
including export and re-import of
otherwise specified,
goods shall be through self-certification procedure’, as
paragraph 7.29 of the HOP I states. Thus, no routine
examinations of
the export consignments of an SEZ
unit by customs authorities take place.

the

this

countervailability of

In the present case, the EOUS was used by the applicant.
As the SEZS was not used, it is therefore not necessary to
analyse
scheme. The
applicant utilised the EOUS to import raw materials
and capital goods free of
to procure
goods domestically free of excise duty, to obtain sales
tax reimbursement
as duty drawback on
furnace oil and to sell part of its production on the
domestic market. Thus,
it availed of all benefits as
described in recital 20 under (i) to (v). The applicant
tax
income
did not
exemption provisions of the EOUS (see recital 53).

avail of benefits under

import duties,

as well

the

(d) Conclusions on the EOUS

The exemptions of an EOU from two types of import
duties (the basic customs duty and special additional
customs duty), the reimbursement of sales tax and the
duty drawback on furnace oil are financial contributions
of the GOI within the meaning of Article 2(1)(a)(ii) of the
basic Regulation. Government revenue which would be
due in the absence of this scheme is forgone, thus, in
addition, conferring a benefit within the meaning of
Article 2(2) of the basic Regulation upon the applicant,
because it saved liquidity by not having to pay duties
normally due and by obtaining a sales tax reimbur-
sement.

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(29)

(30)

The exemptions from excise duty and its import duty
equivalent
(the additional customs duty), however, do
lead to revenue forgone which is otherwise due.
not
Excise and additional customs duty,
if paid, could be
for own future duty liabilities (the
used as a credit
CENVAT mechanism). Therefore,
these duties are not
definitive. By the means of CENVAT-credit only an
added value bears a definitive duty for the company,
not the input materials.

Thus, only the exemption from basic customs duty,
special additional customs duty, the sales tax reimbur-
sement and the duty drawback on furnace oil constitute
subsidies within the meaning of Article 2 of the basic
Regulation. They are contingent
in law upon export
performance, and therefore deemed to be specific and
countervailable under Article 3(4)(a) of the basic Regu-
lation. The export objective of an EOU as set out in
paragraph 6.1 of the FTP is a conditio sine qua non to
obtain the incentives.

consumed in the production of the exported product
(Annex II(II)(4) of the basic Regulation and, in the case
of substitution drawback schemes, Annex III(II)(2) of the
basic Regulation).

these

due
domestic

(34) An EOU is allowed to sell a significant amount of its
production, up to 50 % of its annual turnover, on the
domestic market. Therefore, no obligation in law exists
to export the total amount of manufactured resultant
self-certification
products. Moreover,
procedure
take place
without the supervision and control of a government
official. Consequently, the bonded premises of an EOU
are at least in part not subject to a physical control by
the
the Indian authorities. This, however,
importance of
further verification elements, notably
control of
the nexus between duty free inputs and
resultant export products in order to qualify as a duty
drawback verification system.

the
to
transactions

increases

(35)

(31)

these subsidies cannot be considered as
Furthermore,
permissible duty drawback systems or
substitution
drawback systems within the meaning of Article
2(1)(a)(ii) of the basic Regulation. They do not conform
to the strict rules laid down in Annex I (items (h) and (i)),
Annex II (definition and rules for drawback) and Annex
III (definition and rules for substitution drawback) of the
basic Regulation.

(32)

they are already not

Insofar as the sales tax reimbursement and import duty
exemption provisions are used for purchasing capital
goods,
in conformity with the
rules for permitted drawback systems because those
goods are not consumed in the production process, as
required by Annex I item (h) (sales tax reimbursement)
and (i) (import duties remission).

for

Concerning further verification steps installed it should
be recalled, as mentioned in recital 24, that an EOU is
already de jure at no point in time required to co-relate
every import consignment with the destination of the
corresponding resultant product. Only such consignment
controls, however, would provide the Indian authorities
with sufficient information about the final destination of
inputs to check that the duty exemptions, sales tax reim-
bursements and duty drawback on furnace oil do not
exceed inputs
export production. Monthly tax
returns for domestic sales on a self-assessment basis,
which are periodically assessed by the Indian authorities,
do not suffice. Company internal systems, which are kept
without a legal obligation under the FTP, e.g. a batch
sheets
suffice to replace such key
requirement
for a duty drawback verification system
either. In addition, a duty drawback verification system
needs to be designed and enforced by a government and
should not be left to the discretion of the management of
each individual company concerned to set up an infor-
mation system. Consequently, it is found that, since an
EOU is explicitly not required by the Indian FTP to
record the nexus between input materials and the
resultant product, no effective control mechanism was
set up by the GOI
to determine which inputs were
consumed in export production and in what amounts.

system, do not

(33)

In addition, and also concerning the other benefits which
are available under this scheme, it is found that the GOI
has no effective verification system or procedure in place
to confirm whether and in what amounts duty free
procured inputs or inputs subject to sales tax reimbur-
and duty drawback on furnace oil were
sement

(36) Also, the GOI neither carried out a further examination
based on actual
inputs involved, although this would
normally need to be carried out in the absence of an
effective verification system (Annex II(II)(5) and Annex
III(II)(3) to the basic Regulation), nor did it prove that
no excess remission took place.

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(37) Upon disclosure, the applicant argued that not the same
methodology, within the meaning of Article 22(4) of the
basic Regulation, was used in the case at hand as
compared with
investigation when
original
assessing the EOUS. It must be noted that exporters in
the original
investigation provided evidence that no
excess remission occurred and for this reason the duty
exemption on raw material procurements under
the
EOUS was originally not countervailed.

the

which is found to exist during an investigation period. In
conformity with the same provision and standard EC
practice, a period of 12 months was chosen as review
investigation period and findings are based on this period
of time. No provision in the basic Regulation stipulates
that start up phases of a company shall be disregarded.
The claim of the applicant had therefore been rejected.

(38) However, the applicant did not provide such evidence in
the case at hand. In this context, it is also noted that it
sold the product concerned on the domestic market as
well, i.e. not all duty free procured input materials were
necessarily consumed in export production. Furthermore,
in particular the fact that according to the Indian law
EOUS exporters are not obliged to co-relate import
consignments with the destination of the corresponding
resultant product, constitutes a circumstance not estab-
lished in the original investigation. Therefore, the scheme
has been assessed in the present case in accordance with
the provisions of Article 22(4) of the basic Regulation,
which stipulates that new circumstances need to be
considered. Consequently, the present finding, that the
EOUS does not constitute a permitted duty drawback
or substitution drawback system, is confirmed.

(42)

(e) Calculation of the subsidy amount

(i) Exemption from import duties (basic customs duty
and special additional customs duty) and sales tax
reimbursement on raw materials

The subsidy amount for the applicant was calculated on
the basis of import duties forgone (basic customs duty
and special additional customs duty) on the materials
imported, as well as sales tax and the duty drawback
on furnace oil eligible for reimbursement, all during the
review investigation period. Fees necessarily incurred to
obtain the subsidy were deducted in accordance with
Article 7(1)(a) of the basic Regulation from this sum to
arrive at the subsidy amount as numerator. In accordance
with Article 7(2) of the basic Regulation this subsidy
amount has been allocated over the export turnover as
appropriate
is
contingent upon export performance and it was not
granted by reference to the quantities manufactured,
produced, exported or
transported. The subsidy rate
thus obtained was 12,6 %.

denominator,

because

subsidy

the

(39) Accordingly,

in the

a permitted duty
absence of
drawback system or substitution drawback system, the
countervailable benefit is the remission of total
import
duties (basic customs duty and special additional customs
duty) normally due upon importation, as well as the sales
tax reimbursement and duty drawback on furnace oil, all
during the review investigation period.

(40) Upon disclosure, the applicant claimed that the subsidy
amount, including interest adjustments for non recurring
subsidies, should be calculated only on the basis of the
seven months of the review investigation period during
which it was in commercial operation. Alternatively, the
applicant requested to consider only a 10-month period,
which includes its trial production period.

(41) According to Article 5 of

the
amount of countervailable subsidies shall be calculated
the benefit conferred on the recipient,
in terms of

the basic Regulation,

(43)

In this context,
the applicant claimed that only the
proportion of the subsidy amount directly attributable
to the product concerned should be used as numerator.
The applicant produces a small amount of PET of lower
viscosity as the product concerned and the intermediate
product amorphous PET-chips, which do not fall under
the product scope of
It suggested
apportioning the subsidy amount on the basis of the
turnover of the product concerned in relation to the
total turnover.

this investigation.

(44) However,

it is noted that the various input materials
cannot be per se linked either to the product concerned
or PET of a lower viscosity and the intermediate product
because the same input materials could be used for the
production of all these types. Moreover, as set out in

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the

both

basic

numerator

Regulation,

recitals 32 to 38, no proper verification system with
regard to the final destination of
the input materials
was in place. In such case and in line with Article 7(2)
of
and
denominator were determined on the basis of the total
product range of the applicant in order to allocate the
subsidy amount attributable to the product concerned.
The applicant did not substantiate that any alternative
methodology would lead to a more precise result.
In
the claim was
is noted that even if
particular,
accepted, the denominator would be reduced pro rata,
thus leading to the identical overall result.

it

(ii) Exemption from import duties (basic customs duty
and special additional customs duty) on capital goods

(45) Unlike raw materials, capital goods are not physically
incorporated into the finished goods.
In accordance
with Article 7(3) of the basic Regulation, the benefit to
the investigated company has been calculated on the
the amount of unpaid customs duty on
basis of
imported capital goods spread across a period which
reflects the normal depreciation period of such capital
goods in the industry of
the product concerned (i.e.
18,465 years), which leads to a depreciation rate of
rounded 5,42 %. The amount so calculated which is
then attributable to the review investigation period has
been adjusted by adding interest during this period in
order to reflect the value of the benefit over time and
thereby establishing the full benefit of this scheme to the
recipient. The amount of interest added was based on the
commercial interest rate during the review investigation
period in India. Fees necessarily incurred to obtain the
subsidy were deducted in accordance with Article 7(1)(a)
of the basic Regulation from this sum to arrive at the
subsidy amount as numerator. In accordance with Article
7(2) and (3) of the basic Regulation, this subsidy amount
has been allocated over the export turnover generated
during the review investigation period as appropriate
denominator, because the subsidy is contingent upon
export performance
granted by
reference to the quantities manufactured, produced,
exported or transported. The subsidy rate thus obtained
was 0,9 %.

and it was not

(46) Upon disclosure, the applicant argued that its company
specific depreciation period of 18,93 years should be
used instead of 18,465 years, which is the combined
average together with the originally established depre-
its individual
ciation period. Further,
depreciation period
standard
nowadays in India.

it claimed that
the

industry

reflects

(47) However, as set out above, Article 7(3) of

the basic
Regulation requires a focus on the normal, i.e. average,
the industry and not on a
depreciation period of
company-specific period. Moreover,
the applicant did
not substantiate that the industry depreciation standard
of the industry concerned has generally increased. The
argument was therefore rejected.

(48)

Furthermore, the applicant claimed that for calculating
the depreciation rate should not
the subsidy amount
have been rounded up.

(49) However, it is noted that the rounding has no impact on
the overall result, thus this comment being of no conse-
quence.

(50)

Consequently, the total subsidy rate under the EOUS for
the applicant amounts to 13,5 %.

2.2. SCHEMES ORIGINALLY INVESTIGATED BUT NOT USED

BY THE COMPANY

2.2.1. Duty Entitlement Passbook Scheme (DEPBS)

(51)

The applicant had not availed itself of benefits under the
DEPBS.

2.2.2. Export

Promotion Capital Goods

Scheme

(EPCGS)

(52)

It was established that the applicant had not imported
capital goods under the EPCGS and, therefore, had not
availed itself of the EPCGS.

2.2.3. Income Tax Exemption Scheme

(53)

the applicant did not,

in the
It was established that
taxable profits, receive the benefit of an
absence of
income
the
Income Tax Act 1961 during the review investigation
period.

tax exemption under Section 10B of

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2.3. OTHER SCHEMES USED BY THE COMPANY IN
RELATION TO THE PRODUCT CONCERNED AND
FOUND COUNTERVAILABLE

2.3.1. Export Credit Scheme (ECS)

(a) Legal basis

(54)

The ECS is based on sections 21 and 35A of the Indian
Banking Regulation Act 1949, which allow the Reserve
Bank of India (‘RBI’) to direct commercial banks in the
field of export credits.

(55)

The details of the scheme are set out in Master Circular
IECD No 35/04.02.02/2004-05 (Foreign Currency
Export
IECD No
27/04.02.02/2004-05 (Rupee Export Credit) of the RBI,
which are addressed to all commercial banks in India.

and Master

Circular

Credit)

conditions. In this respect, the Master Circular on Rupee
Export Credit notes that ‘ceiling rates of interest on credit
extended to exporters as prescribed in this Circular are
lower than the maximum lending rates normally charged
indicated as
to other borrowers and are,
concessive in this sense.’

therefore,

(59) Due to the RBI Master Circulars, the applicant enjoyed
interest rates for ECS credits as compared

preferential
with its cash credit interest rates.

(d) Conclusion on the ECS

(60)

(b) Eligibility

(56) Manufacturing exporters and merchant exporters are

eligible for this scheme.

(c) Practical implementation

(57) Under this scheme, the RBI mandatory sets maximum
ceiling interest rates applicable to export credits, both
in Indian rupees or
in foreign currency, which
commercial banks can charge an exporter ‘with a view
to making credit available to exporters at internationally
competitive rates’. The ECS consists of two sub-schemes,
the Pre-Shipment Export Credit Scheme (packing credit),
credits provided to an exporter
which covers
for
financing
the purchase, processing, manufacturing,
packing and/or shipping of goods prior to export, and
the Post-Shipment Export Credit Scheme, which provides
for working capital loans with the purpose of financing
export receivables. The RBI also directs the banks to
provide a certain amount of
their net bank credit
towards export finance.

(58) As a result of these RBI Master Circulars, exporters can
obtain export
rates
compared with the interest rates for ordinary commercial
credits (cash credits), which are purely set under market

at preferential

interest

credits

basic Regulation nor

Firstly, the preferential interest rates of an ECS credit set
by the RBI Master Circulars mentioned in recital 55
decreased interest costs of the applicant as compared
with credit costs purely set by market conditions, thus
conferring a benefit within the meaning of Article 2(2) of
the basic Regulation on it. Secondly, and despite the fact
that the preferential credits under the ECS are granted by
commercial banks, this benefit is to be considered as a
financial contribution by a government within the
meaning of Article 2(1)(iv) of the basic Regulation. In
it should be noted that neither Article
this context,
2(1)(iv) of
the WTO
the
Agreement on Subsidies and Countervailing Measures
(‘ASCM’) require a charge on the public accounts, e.g.
reimbursement of the commercial banks by the GOI,
to establish a subsidy, but only government direction
to carry out functions illustrated in points (i),
(ii) or
(iii) of Article 2(1) of the basic Regulation. The RBI is
a public body and falls therefore under the definition of a
‘government’ as set out in Article 1(3) of the basic Regu-
It is 100 % government-owned, pursues public
lation.
policy
its
e.g. monetary
objectives,
management is appointed by the GOI. The RBI directs
private bodies in the sense that the commercial banks are
bound by certain conditions,
(i) by the
maximum ceilings for interest rates on export credits
mandated in the RBI Master Circulars and (ii) by the
RBI provisions that commercial banks have to provide
a certain amount of their net bank credit towards export
finance. This direction obliges commercial banks to carry
out functions mentioned in Article 2(1)(a)(i) of the basic
Regulation, in this case loans in the form of preferential
export financing. Such direct transfer of funds in the
form of loans under certain conditions would normally
be vested in the government and, within the meaning of
Article 2(1)(a)(iv) of the basic Regulation, the practice, in
no real sense, differs from practices normally followed by
governments. Furthermore, this subsidy is deemed to be
specific and countervailable since the preferential interest
rates are only available in relation to export financing
and are therefore contingent upon export performance
within the meaning of Article 3(4)(a) of the basic Regu-
lation.

inter alia,

policy,

and

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EN

Official Journal of the European Union

11.10.2005

(61)

(62)

(e) Calculation of the subsidy amount

The subsidy amount has been calculated on the basis of
the difference between the interest accrued for export
credits used during the review investigation period and
the amount that would have been payable if the same
interest rates were applicable as for ordinary commercial
credits used by the applicant. This subsidy amount
(numerator) has been allocated over the total export
turnover during the review investigation period as appro-
priate denominator in accordance with Article 7(2) of the
basic Regulation, because the subsidy is contingent upon
export performance and it was not granted by reference
to the quantities manufactured, produced, exported or
transported. The ECS subsidy rate so established is 0,4 %.

2.3.2. West Bengal Incentive Scheme (WBIS)

subsidies established for

of countervailing duty corresponding to the individual
rate of
i.e.
13,9 %. Since the duty imposed by Regulation (EC) No
2603/2000 took the form of a specific amount per
tonne, the abovementioned duty rate for the applicant
has also been converted into a specific amount of EUR
106,5 per tonne.

this company,

(66)

Regulation (EC) No 2603/2000 should therefore be
amended accordingly.

F. UNDERTAKING

(67)

The applicant offered a price undertaking concerning its
exports of the product concerned to the Community, in
accordance with Article 13(1) of the basic Regulation.

the WBIS is set out

in
The detailed description of
Government of West Bengal
(GOWB) Commerce &
Industries Department notification No 588-CI/H of 22
June 1999 (WBIS 1999) which was last replaced by
notification No
24
March 2004 (WBIS 2004). The investigation established
that
the benefit obtained by the applicant was insig-
nificant and, thus, WBIS is not analysed further.

134-CI/O/Incentive/17/03/I

of

(68) After

the offer,

examination of

the Commission
considered the undertaking as acceptable since it would
eliminate the injurious effects of subsidisation. Moreover,
the regular and detailed reports which the applicant
undertook to provide to the Commission will allow
the
effective monitoring. Furthermore,
the applicant are
product and the sales structure of
such that
the risk of
the Commission considers that
circumvention of the undertaking is limited.

the nature of

3. TOTAL AMOUNT OF COUNTERVAILABLE SUBSIDIES

(63)

Taking account of the definitive findings relating to the
schemes as set out above, the rate of countervailable
subsidies for the applicant is as follows:

(69)

South Asian
Petrochem Limited

ECS

EOUS

Total

0,4 %

13,5 %

13,9 %

E. AMENDMENT OF THE MEASURES BEING REVIEWED

(64)

In accordance with Article 15(1) of the basic Regulation,
the amount of the countervailing duty should be less
than the total amount of countervailable subsidies,
if
such lesser duty were to be adequate to remove the
injury to the Community industry. In the original invest-
igation a general injury elimination level of 44,3 % was
established, which is higher than the subsidy rate estab-
lished for the applicant.

(65) On the basis of the findings made during the review
investigation,
the
product concerned into the Community produced and
exported by the applicant should be subject to a level

considered that

imports of

is

it

In order to ensure the effective respect and monitoring of
the undertaking, when the request for release for free
to the undertaking is presented,
circulation pursuant
exemption from the duty is conditional upon presen-
tation to the customs authorities of the Member State
concerned a valid ‘Commercial
issued by the
applicant and containing the information listed in the
Annex to Regulation (EC) No 2603/2000. Where no
is presented, or when it does not
such invoice
correspond to the product presented to customs,
the
appropriate rate of the countervailing duty should be
payable in order to ensure the effective application of
the undertaking.

Invoice’

(70)

In the event of a breach or withdrawal of the under-
taking, a countervailing duty may be imposed pursuant
to Article 13(9) and (10) of the basic Regulation.

G. DISCLOSURE AND DURATION OF THE MEASURES

(71)

The applicant and the GOI were informed of the essential
facts and considerations upon which it was intended to
propose that Regulation (EC) No 2603/2000 be amended
and were given the opportunity to comment. Only the
applicant made comments, essentially on the EOUS,
which have been addressed in the context of
the
respective conclusions under section 2.1.1.(d),

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Official Journal of the European Union

L 266/9

HAS ADOPTED THIS REGULATION:

(b) In Article 2(3), the following shall be inserted into the table:

Article 1

Regulation (EC) No 2603/2000 shall be amended as follows:

(a)

In Article 1(3), the following shall be inserted into the table
under producers in India:

Company

‘South Asian Petrochem Limited

Country

India

TARIC
additional
code

A585’

Country

Company

‘India

South Asian
Petrochem Limited

Definitive duty
(EUR per
tonne)

106,5

TARIC
additional
code

A585’

Article 2

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

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

Done at Luxembourg, 6 October 2005.

For the Council
The President

A. DARLING