Proposal for a Council Regulation imposing a definitive countervailing duty on imports of polyethylene terephthalate (PET) film originating in India following an expiry review pursuant to Article 18 of Regulation (EC) No 2026/97 .
Date: 2006-02-13
Institutions: European Commission
Subjects: India, countervailing charge, export subsidy, import, originating product, plastics

COMMISSION OF THE EUROPEAN COMMUNITIES 

Brussels, 13.2.2006 
COM(2006)56 final 

Proposal for a 

COUNCIL REGULATION 

imposing a definitive countervailing duty on imports of polyethylene terephthalate 
(PET) film originating in India following an expiry review pursuant to Article 18 of 
Regulation (EC) No 2026/97 

. 

(presented by the Commission) 

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EXPLANATORY MEMORANDUM 

1)  CONTEXT OF THE PROPOSAL 

•  Grounds for and objectives of the proposal 

This  proposal  concerns  the  application  of  Council  Regulation  (EC)  No  2026/97  of 
6 October 1997 on protection against subsidized imports from countries not members 
of  the  European  Community,  as  last  amended  by  Council  Regulation  (EC)  No 
461/2004  of  8  March  2004  (‘the  basic  Regulation’),  in  the  expiry  review  of  the 
countervailing duty in force in respect of imports of polyethylene terephthalate (PET) 
film originating in India. 

•  General context 

This proposal is made in the context of the implementation of the basic Regulation and 
is the result of an investigation which was carried out in line with the substantive and 
procedural requirements laid out in the basic Regulation. 

•  Existing provisions in the area of the proposal 

The Council, by Regulation (EC) No 2597/1999 (OJ L 316, 10.12.1999, p. 1), imposed 
a definitive countervailing duty on imports of polyethylene terephthalate (‘PET’) film 
falling within CN codes ex 3920 62 19 and ex 3920 62 90 and originating in India. The 
present investigation is an expiry review of the above measures. 

•  Consistency with other policies and objectives of the Union 

Not applicable. 

2)  CONSULTATION OF INTERESTED PARTIES AND IMPACT ASSESSMENT 

•  Consultation of interested parties 

Interested  parties  concerned  by  the  proceeding  have  already  had  the  possibility  to 
defend their interests during the investigation, in line with the provisions of the basic 
Regulation. 

•  Collection and use of expertise 

There was no need for external expertise. 

•  Impact assessment 

This proposal is the result of the implementation of the basic Regulation. 

The  basic  Regulation  does  not  foresee  a  general  impact  assessment  but  contains  an 
exhaustive list of conditions that have to be assessed. 

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3)  LEGAL ELEMENTS OF THE PROPOSAL 

•  Summary of the proposed action 

On  10  December  2004,  the  Commission  initiated  upon  substantiated  request  of  four 
Community producers an expiry review of the countervailing duty in force in respect of 
imports of polyethylene terephthalate (PET) film originating in India. 

The  review  investigation  found  continuing  subsidisation  of  the  product  concerned, 
which,  should  countervailing  measures  be  lifted,  would  result  in  the  recurrence  of 
injury to the Community industry. It was further established that the lapse of measures 
would not be in the interest of the Community.  

Therefore,  it  is  suggested  that  the  Council  adopts  the  attached  proposal  for  a 
Regulation in order to prolong the existing measures.  

•  Legal basis 

Council  Regulation  (EC)  No  2026/97  of  6  October  1997  on  protection  against 
subsidized  imports  from  countries  not  members  of  the  European  Community,  as  last 
amended by Council Regulation (EC) No 461/2004 of 8 March 2004. 

•  Subsidiarity principle 

The proposal falls under the exclusive competence of the Community. The subsidiarity 
principle therefore does not apply. 

•  Proportionality principle 

The proposal complies with the proportionality principle for the following reasons: 

The form of action is described in the above-mentioned basic Regulation and leaves no 
scope for national decision. 

Indication  of  how  financial  and  administrative  burden  falling  upon  the  Community, 
national governments, regional and local authorities, economic operators and citizens is 
minimized and proportionate to the objective of the proposal is not applicable. 

•  Choice of instruments 

Proposed instruments: regulation. 

Other means would not be adequate for the following reason: 

Other  means  would  not  be  adequate  because  the  basic  Regulation  does  not  foresee 
alternative options. 

4)  BUDGETARY IMPLICATION 

The proposal has no implication for the Community budget. 

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Proposal for a 

COUNCIL REGULATION 

imposing a definitive countervailing duty on imports of polyethylene terephthalate 
(PET) film originating in India following an expiry review pursuant to Article 18 of 
Regulation (EC) No 2026/97 

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  member  of  the  European  Community1  (‘the 
basic Regulation’), and in particular Article 18 thereof, 

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

Whereas: 

A. 

PROCEDURE 

1. 

Existing  measures  and  terminated  investigations  concerning  the  same 
product 

(1) 

(2) 

The Council, by Regulation (EC) No 2597/19992, imposed a definitive countervailing 
duty on imports of polyethylene terephthalate (‘PET’) film falling within CN codes ex 
3920 62 19 and ex 3920 62 90 and originating in India (‘the definitive countervailing 
measures’). The measures took the form of an ad valorem duty ranging between 3,8% 
and  19,1%  imposed  on  imports  from  individually  named  exporters,  with  a  residual 
duty rate of 19,1% imposed on imports from all other companies. 

The  Council,  by  Regulation  (EC)  No  1676/20013,  imposed  definitive  anti-dumping 
duties  on  imports  of  PET  film  originating  in  India  and  the  Republic  of  Korea.  The 
measures  took  the  form  of  an  ad  valorem  duty  ranging  between  0%  and  62,6%  on 
imports of PET film originating in India (‘the definitive anti-dumping measures’), with 
the  exception  of  imports  from  five  Indian  companies  (Ester  Industries  Limited 
(‘Ester’),  Flex  Industries  Limited  (‘Flex’),  Garware  Polyester  Limited  (‘Garware’), 

1 

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OJ  L  288,  21.10.1997,  p.  1.  Regulation  as  last  amended  by  Council  Regulation  No  461/2004 
(OJ L 77, 13.3.2004, p. 12). 
OJ L 316, 10.12.1999, p. 1. 
OJ L 227, 23.8.2001, p. 1. 

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MTZ  Polyesters  Limited  (‘MTZ’),  and  Polyplex  Corporation  Limited  (‘Polyplex’)) 
from whom undertakings had been accepted by Decision (2001/645/EC)4. 

It  is  noted  that  the  company  formerly  known  as  MTZ  Polyesters  Limited  changed 
name.  Its  new  name  is  MTZ  Polyfilms  Limited.  This  change  of  name  in  no  way 
affected  the  findings  of  Council  Regulation  (EC)  No  2597/1999  and  the  right  of  the 
company to benefit from the individual duty rate applied to it under its previous name. 
The Commission announced on 17 February 2005 the change of name of MTZ by a 
notice published in the Official Journal of the European Union5. It is further noted that 
MTZ changed its address with effect from July 2005, with no other changes to either 
the company’s ownership, structure or operations. The address of the company should 
therefore be amended. 

The  Council,  by  Regulations  (EC)  Nos  1975/2004  and  1976/20046,  extended  the 
definitive  countervailing  and  anti-dumping  measures  on  imports  of  PET  film 
originating in India, to imports of the same product consigned from Brazil and Israel, 
whether declared as originating in Brazil or Israel or not. 

On  28  June  20027,  the  Commission  initiated  a  partial  interim  review  limited  to  the 
form of the definitive countervailing measures and, in particular to the examination of 
the acceptability of an undertaking offered by one Indian exporting producer, pursuant 
to  Article  19  of  the  basic  Regulation.  This  investigation  has  been  terminated  by 
Council  Regulation  (EC)  No  XXX/20068,  which  amended  Regulation  (EC)  No 
1676/2001. 

On 22 November 20039, the Commission initiated a partial interim review limited to 
the  form  of  the  definitive  anti-dumping  measures.  This  investigation  has  been 
concluded by Council Regulation (EC) No XXX/20068. 

On 4 January 200510, the Commission initiated a partial interim review limited to the 
level of the definitive anti-dumping measures. This investigation has been concluded 
by  Council  Regulation  (EC)  No  YYY/200611,  which  amended  the  level  of  the 
definitive anti-dumping measures. 

On  23  August  200512,  the  Commission  initiated  a  review  of  Regulations  (EC)  Nos 
1975/2004 and 1976/2004 with respect to the application of an Israeli producer for an 
exemption  from  the  extended  measures.  This  investigation  has  been  terminated  by 
Council Regulation (EC) No 101/200613. 

OJ L 227, 23.8.2001, p. 56. 
OJ C 40, 17.2.2005, p. 8. 
OJ L 342, 18.11.2004, p. 1 and p. 8. 
OJ C 154, 28.6.2002, p. 2. 
OJ C […], […], p. […]. 
OJ C 281, 22.11.2003, p. 4. 
OJ C 1, 4.1.2005, p. 5. 
OJ C […], […], p. […]. 
OJ L 218, 23.8.2005, p. 3. 
OJ L 17, 21.1.2006, p. 1. 

(3) 

(4) 

(5) 

(6) 

(7) 

(8) 

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2.  Request for an expiry review 

(9) 

Following  the  publication  of  a  notice  of  impending  expiry14  of  the  definitive 
countervailing measures in force, the Commission received a request for the initiation 
of an expiry review of Council Regulation (EC) No 2597/99 pursuant to Article 18 of 
the  basic  Regulation,  from  Community  producers  of  the  like  product,  i.e.  DuPont 
Teijin Films, Mitsubishi Polyester Film GmbH, Nuroll SpA and Toray Plastics Europe 
(‘the applicants’). The applicants represent a major proportion, in this case over 50%, 
of the total Community production of PET film.  

(10)  The request was based on the grounds that the expiry of the measures would be likely 
to  result  in  the  continuation  or  recurrence  of  subsidisation  and  injury  to  the 
Community industry. 

(11)  Prior to the initiation of the expiry review, and in accordance with Articles 22(1) and 
10(9) of the basic Regulation, the Commission notified the Government of India (‘the 
GOI’) that it had received a properly documented review request and invited the GOI 
for consultations with the aim of clarifying the situation as regards the contents of the 
complaint  and  arriving  at  a  mutually  agreed  solution.  However,  the  Commission  did 
not receive any answer from the GOI regarding its offer for consultation. 

3. 

Initiation of an expiry review 

(12)  The Commission examined the evidence submitted by the applicants and considered it 
sufficient  to  justify  the  initiation  of  a  review  in  accordance  with  the  provisions  of 
Article 18 of the basic Regulation. After consultation of the Advisory Committee, the 
Commission  initiated  an  expiry  review  of  Council  Regulation  (EC)  No  2597/99  by 
means of a notice published in the Official Journal of the European Union15. 

4. 

Investigation period 

(13)  The investigation covered the period from 1 October 2003 to 30 September 2004 (‘the 
review  investigation  period’  or  ‘IP’).  The  examination  of  trends  in  the  context  of 
injury  covered  the  period  from  1  January  2001  up  to  the  end  of  the  review 
investigation period (‘the period considered’). 

5. 

Parties concerned by the investigation 

(14)  The  Commission  officially  advised  the  applicants,  other  known  Community 
producers,  exporting  producers,  importers,  upstream  suppliers,  users  and  the  GOI  of 
the initiation of the investigation. Interested parties had the opportunity to make their 
views known in writing. All interested parties, who so requested and showed that there 
were particular reasons why they should be heard, were granted a hearing. The written 
and oral comments submitted by the parties were considered and, where appropriate, 
taken into account. 

14 
15 

OJ C 62, 11.3.2004, p. 4. 
OJ C 306, 10.12.2004, p. 2. 

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(15) 

In  view  of  the  apparently  large  number  of  exporting  producers  of  PET  film  in  India 
which were named in the request, the use of sampling techniques for the investigation 
of subsidisation was envisaged in the notice of initiation in accordance with Article 27 
of the basic Regulation. In order to decide whether sampling would be necessary and, 
if  so,  to  select  a  sample,  all  exporting  producers  were  asked  to  make  themselves 
known  and  to  provide,  as  specified  in  the  notice  of  initiation,  basic  information  on 
their activities related to the product concerned during the IP. After examination of the 
information  submitted,  and  given  the  high  number  of  exporting  producers  which 
indicated their willingness to cooperate, it was decided that sampling was necessary. 

(16)  The  Commission  sent  questionnaires  to  all  parties  known  to  be  concerned  or  who 
made  themselves  known  within  the  deadlines  set  in  the  notice  of  initiation.  Replies 
were  received  from  four  Community  producers,  eight  exporting  producers,  one 
importer/user, one up-stream supplier and the GOI. 

(17)  From the eight Indian exporting producers, four companies (Ester, Flex, Garware and 
Jindal Poly Films Limited (‘Jindal’)), were selected for the sample. These were found 
to constitute the largest representative volume of the production, sales and exports to 
the Community of PET film, which could reasonably be investigated within the time 
available, pursuant to Article 27(1) of the basic Regulation. 

(18)  By  a  notice  published  in  the  Official  Journal  of  the  European  Union16,  the 
Commission announced that the company formerly known as Jindal Polyester Limited 
changed its address. The address of the company should therefore be amended. 

(19)  By  a  notice  published  in  the  Official  Journal  of  the  European  Union17,  the 
Commission announced that the company formerly known as Jindal Polyester Limited 
changed  its  name  to  Jindal  Poly  Films  Limited.  The  name  of  the  company  should 
therefore be amended. 

(20)  The  Commission  sought  and  verified  all  information  it  deemed  necessary  for  the 
determination  of  subsidisation  and  injury  as  well  as  to  determine  whether  there  is  a 
likelihood  of  continuation  or  recurrence  of  subsidisation  and  injury  and  whether 
maintaining the measures would be in the Community interest. Verification visits were 
carried out at the premises of the following interested parties: 

(a)  Community producers 

– 

DuPont Teijin Films, Luxemburg and Middlesbrough, United Kingdom, 

–  Mitsubishi Polyester Film GmbH, Wiesbaden, Germany, 

– 

– 

Nuroll SpA, Pignataro Maggiore, Italy, 

Toray Plastics Europe, Miribel, France; 

16 
17 

OJ C 189, 9.8.2002, p. 34. 
OJ C 297, 2.12.2004, p. 2. 

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(b)  Government of India 

–  Ministry of Commerce, New Delhi; 

(c)  Exporting producers in India 

– 

– 

– 

– 

Ester Industries Limited, New Delhi, 

Flex Industries Limited, New Delhi, 

Garware Polyester Limited, Aurangabad, 

Jindal Poly Films Limited, New Delhi; 

(d) 

Importer/user 

– 

Coveme SpA, San Lazzaro di Savena, Italy; 

(e)  Up-stream supplier 

– 

Oxxynova GmbH, Marl, Germany. 

6.  Disclosure 

(21)  Pursuant to Article 30 of the basic Regulation, the GOI and the other interested parties 
were  informed  of  the  essential  facts  and  considerations  upon  which  it  is  intended  to 
propose  the  continuation  of  measures.  They  were  also  given  a  reasonable  time  to 
comment.  Certain  parties  presented  their  comments  in  writing.  In  addition,  the  GOI 
was  offered,  and  accepted,  consultation  pursuant  to  Article  10(11)  of  the  basic 
Regulation. All submissions and comments were taken duly into consideration. 

B. 

PRODUCT CONCERNED AND LIKE PRODUCT 

(22)  The  product  covered  by  this  review  is  the  same  product  as  the  one  concerned  by 
Council  Regulation  (EC)  No  2597/99,  namely  PET  film  falling  within  CN  codes  ex 
3920 62 19 and ex 3920 62 90 originating in India (‘the product concerned’). 

(23)  The  investigation  confirmed  that,  as  in  the  original  investigation,  the  product 
concerned  and  the  PET  film  produced  and  sold  on  the  domestic  market  in  India,  as 
well  as  the  PET  film  produced  and  sold  in  the  Community  by  the  Community 
producers  had  the  same  basic  physical  characteristics  and  uses  to  the  product 
concerned and were thus a like product within the meaning of Article 1(5) of the basic 
Regulation. 

C. 

SUBSIDIES 

1. 

Introduction 

(24)  On the basis of the information contained in the review request and the replies to the 
Commission’s  questionnaire,  the  following  schemes,  which  allegedly  involve  the 
granting of subsidies, were investigated:  

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1.1.  Nationwide schemes  

(a)  Advance Licence/Advance Release Order,  

(b)  Duty Entitlement Passbook, 

(c)  Special Economic Zones/Export Oriented Units, 

(d)  Export Promotion Capital Goods, 

(e)  Duty Free Replenishment Certificate, 

(f) 

Income Tax Exemption, 

(g)  Export Credit, 

- Pre-export 

- Post-export 

(h)  Capital Infusions. 

(25)  The schemes (a) to (e) specified above are based on the Foreign Trade (Development 
and Regulation) Act 1992 (No 22 of 1992) which entered into force on 7 August 1992 
(‘Foreign Trade Act’). The Foreign Trade Act authorises the GOI to issue notifications 
regarding the export and import policy. These are summarised in ‘Export and Import 
Policy’  documents,  which  are  issued  by  the  Ministry  of  Commerce  every  five  years 
and  updated  regularly.  One  Export  and  Import  Policy  document  is  relevant  to  the 
review investigation period of this case; i.e. the five-year plan relating to the period 1 
April 2002 to 31 March 2007 (‘EXIM-policy 2002-2007’). In addition, the GOI also 
sets  out  the  procedures  governing  the  EXIM-policy  2002-2007  in  a  ‘Handbook  of 
Procedures - 1 April 2002 to 31 March 2007, Volume I’ (‘HOP I 2002-2007’)18. The 
Handbook of Procedure is also updated on a regular basis. 

(26)  Scheme (f) is based on the Income Tax Act of 1961, which is amended yearly by the 

Finance Act. 

(27)  Scheme  (g)  is  based  on  sections  21  and  35A  of  the  Banking  Regulation  Act  1949, 
which  allows  the  Reserve  Bank  of  India  (‘RBI’)  to  instruct  commercial  banks 
regarding export credits.  

(28)  Scheme (h) is an ad hoc subsidy for which no legal basis in the Indian Law could be 

established. 

1.2.  Regional schemes 

(29)  On the basis of the information contained in the review request and the replies to the 
Commission’s questionnaire, the Commission also investigated a number of schemes 
which  allegedly  are  granted  by  regional  governments  or  authorities  in  certain  Indian 
States. 

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Notification No 1/202002-2007 of 31.3.2002 of the Ministry of Commerce and Industry of the GOI. 

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(a)  State of Uttar Pradesh, 

-  The  schemes  are  based  on  the  Trade  Tax  Act,  1948  of  the  Government  of  Uttar 
Pradesh (‘the GOUP’). 

(b)  State of Maharashtra, 

-  Package  Scheme  of  Incentives  of  the  Government  of  Maharashtra  (‘the  GOM’) 
1993.  This  scheme  is  based  on  resolutions  of  the  GOM  Industries,  Energy  and 
Labour Department. 

2.  Nationwide schemes 

2.1.  Advance Licence scheme (‘ALS’)/Advance Release Order (‘ARO’) 

(a)  Legal basis 

(30)  The detailed description of the scheme is contained in paragraphs 4.1.1 to 4.1.14 of the 

EXIM-policy 2002-2007 and chapters 4.1 to 4.30 of the HOP I 2002-2007.  

(b)  Eligibility 

(31)  The ALS consists of six sub-schemes, as described in more detail in recital (32) below. 
Those sub-schemes inter alia differ in the scope of eligibility. Manufacturer-exporters 
and  merchant-exporters  “tied  to”  supporting  manufacturers  are  eligible  for  the  ALS 
physical  exports  and  for  the  ALS  for  annual  requirement.  Manufacturer–exporters 
supplying  the  ultimate  exporter  are  eligible  for  ALS  for  intermediate  supplies.  Main 
contractors  which  supply  to  the  “deemed  export”  categories  mentioned  in  paragraph 
8.2  of  the  EXIM-policy  2002-2007,  such  as  suppliers  of  an  export  oriented  unit 
(‘EOU’),  are  eligible  for  ALS  deemed  export.  Eventually,  intermediate  suppliers  to 
manufacturer-exporters  are  eligible  for  “deemed  export”  benefits  under  the  sub-
schemes ARO and back to back inland letter of credit. 

(c)  Practical implementation 

(32)  Advance licences can be issued for: 

(i)  Physical exports: This is the main sub-scheme. It allows for duty free import of 
input  materials  for  the  production  of  a  specific  resultant  export  product. 
“Physical”  in  this  context  means  that  the  export  product  has  to  leave  Indian 
territory. Import allowance and export obligation including the type of export 
product are specified in the licence. 

(ii)  Annual requirement: Such a licence is not linked to a specific export product, 
but  to  a  wider  product  group  (e.g.  chemical  and  allied  products).  The  licence 
holder can – up to a certain value threshold set by its past export performance - 
import duty free any input to be used in manufacturing any of the items falling 
under  such  a  product  group.  It  can  choose  to  export  any  resultant  product 
falling under the product group using such duty-exempt material.  

(iii)  Intermediate supplies: This sub-scheme covers cases where two manufacturers 
intend  to  produce  a  single  export  product  and  divide  the  production  process. 

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The  manufacturer-exporter  produces  the  intermediate  product.  It  can  import 
duty  free  input  materials  and  can  obtain  for  this  purpose  an  ALS  for 
intermediate  supplies.  The  ultimate  exporter  finalizes  the  production  and  is 
obliged to export the finished product.  

(iv)  Deemed  exports:  This  sub-scheme  allows  a  main  contractor  to  import  inputs 
free of duty which are required in manufacturing goods to be sold as “deemed 
exports”  to  the  categories  of  customers  mentioned  in  paragraph  8.2.(b)  to  (f), 
(g), (i) and (j) of the EXIM policy 2002-2007. According to the GOI, deemed 
exports refer to those transactions in which the goods supplied do not leave the 
country.  A  number  of  categories  of  supply  is  regarded  as  deemed  exports 
provided the goods are manufactured in India, e.g. supply of goods to an EOU 
or to a company situated in a special economic zone (‘SEZ’).  

(v)  ARO: The ALS 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 
indigenous  supplier  upon  delivery  of  the  items  specified  therein.  The 
endorsement  of  the  ARO  entitles  the  indigenous  supplier  to  the  benefits  of 
deemed exports as set out in paragraph 8.3 of the EXIM-policy 2002-2007 (i.e. 
ALS  for  intermediate  supplies/deemed  export,  deemed  export  drawback  and 
refund of terminal excise duty). The ARO mechanism refunds taxes and duties 
to  the  supplier  instead  of  refunding  the  same  to  the  ultimate  exporter  in  the 
form of drawback/refund of duties. The refund of taxes/duties is available both 
for indigenous inputs as well as imported inputs.  

(vi)  Back to back inland letter of credit: This sub-scheme again covers indigenous 
supplies  to  an  ALS  holder.  The  holder  of  an  ALS  can  approach  a  bank  for 
opening  an  inland  letter  of  credit  in  favour  of  an  indigenous  supplier.  The 
licence will be invalidated by the bank for direct import, only in respect of the 
value and volume of items being sourced indigenously instead of importation. 
The indigenous supplier will be entitled to deemed export benefits as set out in 
paragraph  8.3  of  the  EXIM-policy  2002-2007  (i.e.  ALS  for  intermediate 
supplies/deemed  export,  deemed  export  drawback  and  refund  of  terminal 
excise duty).  

(33)  From  the  four  sampled  exporting  producers,  only  one  used  the  ALS  during  the  IP. 
More precisely, this exporting producer made use of two sub-schemes, namely (i) and 
(ii) above. This co-operating exporter explained that, whilst it made use of the DEPB 
in 1999 at the time of the definitive countervailing measures, it had since decided to 
stop using the DEPB and to make use of the ALS instead. 

(34)  For verification purposes by the Indian authorities, a licence holder is legally obliged 
to maintain “a true and proper account of licence-wise consumption and utilisation of 
imported  goods”  in  a  specified  format  (chapter  4.30  HOP  I  2002-2007),  hereafter 
referred to as the “consumption register”. The verification evidenced that the company 
properly maintains a consumption register. 

(35) 

In regard to sub-scheme (i) above, both the import allowance and the export (including 
deemed  export)  obligation  are  fixed  in  volume  and  value  by  the  GOI  and  are 
documented  on  the  licence.  In  addition,  at  the  time  of  import  and  of  export,  the 

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corresponding  transactions  are  to  be  documented  by  Government  officials  on  the 
licence. The volume of imports allowed under this scheme is determined by the GOI 
on the basis of standard input-output norms (‘SIONs’). SIONs exist for most products 
including the product concerned and are published in the HOP I 2002-2007.  

In  case  of  the  sub-scheme  (ii)  listed  above  under  recital  (32)  (ALS  for  annual 
requirement),  only  the  import  allowance  in  value  is  documented  on  the  licence.  The 
licence  holder  is  obliged  to  “maintain  the  nexus  between  imported  inputs  and  the 
resultant product” (paragraph 4.24A(c) HOP I 2002-2007). 

Imported  input  materials  are  not  transferable  and  have  to  be  used  to  produce  the 
resultant  export  product.  The  export  obligation  must  be  fulfilled  within  a  prescribed 
time frame after issuance of the licence (18 months with two possible extensions of 6 
months each). 

(36) 

(37) 

(38)  The verification evidenced that the company specific consumption rate of the key raw 
material  needed  to  produce  one  kilogram  of  PET  film,  and  as  reported  in  the 
consumption register, was lower than the corresponding SION. In other words, the co-
operating exporter was allowed to import duty-free as per the SION more of the said 
raw material than actually needed by its manufacturing process. The company claimed 
that the GOI will adjust the excess benefit when the licences will have expired, i.e. 30 
months from the issuance of the licence, see (37) above, as the common practice is to 
make  use  of  the  two  possible  extensions  of  6  months  each.  However,  given  that  the 
first  licence  was  issued  to  the  company  on  31.01.2003,  the  company  could  not 
substantiate its allegation during the on spot verification of the Commission services 
which  took  place  in  May  2005.  In  December  2005,  when  the  company  commented 
upon disclosure, it did not provide either any evidence that excess remission had been 
adjusted. These SIONs clearly lead to an excess remission of duties. The GOI did not 
provide  any  evidence  showing  that  it  systematically  adjusted  excess  remission  when 
licences  expired,  neither  that  there  exists  a  reasonable  system  to  adjust  the  excess 
remission.  

(d)  Disclosure comments 

(39)  Further  to  disclosure,  the  GOI  indicated  that,  on  three  occasions  during  2005,  it  had 
modified the ALS in order to, inter alia, better control the use of the ALS by exporting 
producers and that the modifications and the improved control methods would lead to 
no excess remission. It was therefore claimed that any subsidies generated by the ALS 
and incorporated into the calculation should not be countervailed. 

(40) 

It should be noted that the changes to the ALS referred to took effect both after the IP 
and  after  the  verification  visit  of  the  Commission  services,  and  were  therefore 
unverifiable in their practice. In addition, by means of a public notice released on 10 
October 2005, paragraph 4.26 HOP I 2002-2007 was complemented as follows: “the 
licensing authority shall also take action against the licensee in case of non submission 
of  duly  filled  in  appendix  23  (other  name  for  the  consumption  register)”  However, 
there is no indication of what that action might be. 

(41) 

It  is  therefore  considered  that  the  above  modifications  introduced  by  the  Indian 
authorities have not been verified in their practical implementation. In particular, the 
consequences of a non submission of the consumption register are not provided. The 

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conclusions set out below are therefore based on the findings as established during the 
IP.  

(e)  Conclusion 

(42)  The  exemption  from  import  duties  is  a  subsidy  within  the  meaning  of  Article 
2(1)(a)(ii) and Article 2(2) of the basic Regulation, i.e. a financial contribution of the 
GOI which conferred a benefit upon the investigated exporters.  

(43) 

In  addition,  the  ALS  for  physical  exports  and  the  ALS  for  annual  requirement  are 
clearly  contingent  in  law  upon  export  performance,  and  therefore  deemed  to  be 
specific and countervailable under Article 3(4)(a) of the basic Regulation. Without an 
export commitment a company cannot obtain benefits under these schemes. 

(44)  The  sub-schemes  used  in  the  present  case  cannot  be  considered  as  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  item  (i),  Annex  II  (definition  and  rules  for  drawback)  and  Annex  III 
(definition and rules for substitution drawback) of the basic Regulation. The GOI did 
not  effectively  apply  its  verification  system  or  procedure  to  confirm  whether  and  in 
what amounts inputs were 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). The SIONs for the product concerned were 
not  sufficiently  precise.  The  SIONs  themselves  cannot  be  considered  a  verification 
system  of  actual  consumption,  because  the  design  of  those  overly  generous  standard 
norms  does  not  enable  the  GOI  to  verify  with  sufficient  precision  what  amount  of 
inputs were consumed in the export production. Furthermore, an effective control done 
by the GOI based on the consumption register does not take place.  

(45)  The sub-schemes are therefore countervailable.  

(f)  Calculation of the subsidy amount 

(46)  The subsidy amount for the exporter which used the ALS was calculated as follows. 
The numerator is the import duties forgone (basic customs duty and special additional 
customs duty) on the material imported under the two ALS sub-schemes used for the 
product concerned during the IP (numerator). In accordance with Article 7(1)(a) of the 
basic Regulation, fees necessarily incurred to obtain the subsidy were deducted from 
the  subsidy  amounts  where  justified  claims  were  made.  In  accordance  with  Article 
7(2) of the basic Regulation, the denominator is the export turnover generated by the 
product concerned during the IP.  

(47)  The  company  which  made  use  of  this  scheme  during  the  IP  obtained  a  subsidy  of 

6,0%. 

2.2.  Duty Entitlement Passbook scheme (‘DEPB’) 

(a)  Legal Basis 

(48)  The  detailed  description  of  the  DEPB  is  contained  in  paragraph  4.3  of  the  EXIM-
policy 2002-2007 and in chapter 4 of the HOP I 2002-2007. At the time of the original 
investigation, two forms of DEPB existed – pre-export and post-export. In April 2000 

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the  pre-export  form  of  DEPB  was  discontinued  and  therefore  the  investigation  only 
examined the post-export form of the alleged subsidy. 

(b)  Eligibility 

(49)  Any  manufacturer-exporter  or  merchant-exporter  is  eligible  for  this  scheme.  Three 

companies were found to benefit from this scheme during the IP. 

(c)  Practical implementation of the DEPB 

(50)  An eligible exporter can apply for DEPB credits which are calculated as a percentage 
of  the  value  of  products  exported  under  this  scheme.  Such  DEPB  rates  have  been 
established  by  the  Indian  authorities  for  most  products,  including  the  product 
concerned.  They  are  determined  on  the  basis  of  SIONs,  taking  into  account  a 
presumed  import  content  of  inputs  in  the  export  product  and  the  customs  duty 
incidence on such presumed imports, regardless of whether import duties have actually 
been paid or not.  

(51)  To be eligible for benefits under this scheme, a company must export. At the point in 
time  of  the  export  transaction,  a  declaration  must  be  made  by  the  exporter  to  the 
authorities in India indicating that the export is taking place under the DEPB. In order 
for the goods to be exported, the Indian customs authorities issue, during the dispatch 
procedure,  an  export  shipping  bill.  This  document  shows,  inter  alia,  the  amount  of 
DEPB credit which is to be granted for that export transaction. At this point in time, 
the  exporter  knows  the  benefit  it  will  receive.  Once  the  customs  authorities  issue  an 
export  shipping  bill,  the  GOI  has  no  discretion  over  the  granting  of  a  DEPB  credit. 
The relevant DEPB rate to calculate the benefit is that which applied at the time the 
export  declaration  is  made.  Therefore,  there  is  no  possibility  for  a  retroactive 
amendment to the level of the benefit. 

(52) 

It was also found that in accordance with Indian accounting standards, DEPB credits 
can  be  booked  on  an  accrual  basis  as  income  in  the  commercial  accounts,  upon 
fulfilment of the export obligation. Such credits can be used for payment of customs 
duties  on  subsequent  imports  of  any  goods  unrestrictedly  importable,  except  capital 
goods.  Goods  imported  against  such  credits  can  be  sold  on  the  domestic  market 
(subject to sales tax) or used otherwise. DEPB credits are freely transferable and valid 
for a period of 12 months from the date of issue. 

(53)  An  application  for  DEPB  credits  can  cover  up  to  25  export  transactions  or,  if 
electronically  filed,  an  unlimited  amount  of  export  transactions.  De  facto,  no  strict 
deadlines  to  apply  for  DEPB  credits  exist,  because  the  time  periods  mentioned  in 
chapter  4.47  HOP  I  2002-2007  are  always  counted  from  the  most  recent  export 
transaction included in a given DEPB application. 

(54)  The  GOI  and  one  exporter  brought  to  the  attention  of  the  Commission  services  that 
this  scheme  would  be  soon  discontinued  and  be  replaced  by  an  allegedly  “WTO 
compatible”  scheme.  The  DEPB  was  originally  planned  to  expire  on  1st  April  2005. 
However, as the replacement scheme was not ready to be implemented, the existence 
of the DEPB was prolonged until 1st April 2006. Should the new scheme not be ready 
for entry into force by that date, the DEPB would remain in force as long as necessary. 

EN 

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(d)  Disclosure comments 

(55)  Upon  disclosure,  the  GOI  and  two  exporters,  which  received  benefits  under  this 
scheme,  commented  on  the  DEPB  analysis  as  set  out  above.  They  (i)  submitted  that 
DEPB  credits  can  allegedly  only  be  obtained  if  the  goods  which  are  exported  bear 
import duties on their input materials, (ii) questioned the calculation methodology of 
the Commission based on an “accrual” basis as opposed to the methodology used in 
the  original  proceeding  of  1999  which  led  to  the  definitive  countervailing  measures 
and which was based on a “receipt” basis, (iii) requested immediate termination of the 
proceeding  with  respect  to  the  DEPB  on  the  ground  that  the  GOI  has  announced  its 
termination  as  of  1  April  2006  and  (iv)  alleged  that  not  to  dismiss  it  from  the 
calculation  would  be  a  violation  of  the  provisions  contained  in  Article  27  ASCM  in 
favour of developing countries. 

(56)  Claim (i) above has not been further substantiated by the GOI nor by the exporters. It 
is anyhow contradicted by the findings of the investigation as referred to under recitals 
(50) to (53) above. This claim is therefore rejected. 

(57)  As  regards  claim  (ii),  the  methodology  used  in  this  investigation  aims  at  better 
reflecting  the  impact  of  the  subsidy  over  the  financial  situation  of  the  co-operating 
exporters during a given investigation period. In this regard, it was considered that the 
benefit is conferred on the recipient at the point in time when an export transaction is 
made under this scheme. This is confirmed, inter alia, by the booking of DEPB credits 
on  an  accrual  basis  according  to  Indian  accounting  standards.  It  is  further  noted  that 
this  methodology  has  already  been  used  several  times  by  the  Commission  services, 
notably  in  the  graphite  electrode  system  case19  and  that  this  methodology  does  not 
result  in  a  complete  re-evaluation  of  the  scheme,  which,  indeed,  has  always  been 
found countervailable. This claim is therefore rejected. 

(58)  As  to  claim  (iii),  it  was  indeed  found  that  the  GOI  has  in  the  past  announced  the 
abolition  of  the  DEPB.  The  DEPB  was  to  be  terminated  on  31  March  2005  but  was 
prolonged  by  the  GOI  until  30  September  2005.  The  GOI  then  further  extended  the 
validity of the scheme until 1 April 2006. In these circumstances, it is still uncertain as 
to  whether  the  DEPB  will  in  fact  be  abolished  from  1  April  2006  (see  recital  (123) 
below).  

(59)  Regarding claim (iv) above, there is no violation of the developing country provisions 
contained  in  Article  27  ASCM.  That  Article  does  not  preclude,  in  fact,  a  WTO 
injurious  effects  of 
Member  from 
subsidisation by another Member. As the DEPB has been found to be countervailable, 
this claim is therefore rejected.  

taking  countervailing  action  against 

the 

(e)  Conclusions on the DEPB 

(60)  The  DEPB  provides  subsidies  within  the  meaning  of  Article  2(1)(a)(ii)  and  Article 
2(2)  of  the  basic  Regulation.  A  DEPB  credit  is  a  financial  contribution  by  the  GOI, 
since  the  credit  will  eventually  be  used  to  offset  import  duties,  thus  decreasing  the 

19 

Council Regulation (EC) No 1628/2004 of 13.9. 2004, OJ L 295, p. 4 (recital (13)).  

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15 

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GOI’s  duty  revenue  which  would  be  otherwise  due.  In  addition,  the  DEPB  credit 
confers a benefit upon the exporter, because it improves the liquidity of the company. 

(61)  Furthermore, the DEPB is contingent in law upon export performance, and therefore 
deemed  to  be  specific  and  countervailable  under  Article  3(4)(a)  of  the  basic 
Regulation.  

(62)  This scheme cannot be considered a permissible duty drawback system or substitution 
drawback system within the meaning of Article 2(1)(a)(ii) of the basic Regulation. It 
does not 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 drawback) 
of  the  basic  Regulation.  An  exporter  is  under  no  obligation  to  actually  consume  the 
goods imported free of duty in the production process and the amount of credit is not 
calculated in relation to actual inputs used. Moreover, there is no system or procedure 
in  place  to  confirm  which  inputs  are  consumed  in  the  production  process  of  the 
exported product or whether an excess payment of import duties occurred within the 
meaning of item (i) of Annex I and Annexes II and III of the basic Regulation. Lastly, 
an  exporter  is  eligible  for  the  DEPB  benefits  regardless  of  whether  it  imports  any 
inputs  at  all.  In  order  to  obtain  the  benefit,  it  is  sufficient  for  an  exporter  to  simply 
export goods without demonstrating that any input material was imported. Thus, even 
exporters which procure all of their inputs locally and do not import any goods which 
can be used as inputs are still entitled to benefit from the DEPB.  

(f)  Calculation of the subsidy amount 

(63) 

In  accordance  with  Articles  2(2)  and  5  of  the  basic  Regulation,  the  amount  of 
countervailable  subsidies  was  calculated  in  terms  of  the  benefit  conferred  on  the 
recipient, which is found to exist during the review investigation period. In this regard, 
it  was  considered  that  the  benefit  is  conferred  on  the  recipient  at  the  point  in  time 
when  an  export  transaction  is  made  under  this  scheme.  At  this  moment,  the  GOI  is 
liable  to  forego  the  customs  duties,  which  constitutes  a  financial  contribution  within 
the meaning of Article 2(1)(a)(ii) of the basic Regulation. 

(64) 

In light of the above, it is considered appropriate to assess the benefit under the DEPB 
as  being  the  sum  of  the  credits  earned  on  all  export  transactions  made  under  this 
scheme during the investigation period.  

(65)  Where justified claims were made, fees necessarily incurred to obtain the subsidy were 
deducted from the credits so established to arrive at the subsidy amounts as numerator, 
pursuant to Article 7(1)(a) of the basic Regulation.  

(66) 

In  accordance  with  Article  7(2)  of  the  basic  Regulation  these  subsidy  amounts  have 
been allocated over the total export turnover during the review investigation period as 
appropriate denominator, because the subsidy is contingent upon export performance 
and it was not granted by reference to the quantities manufactured, produced, exported 
or  transported.  Three  companies  benefited  from  this  scheme  during  the  IP  and 
obtained subsidies of between 9,0% and 11,0%. 

2.3.  Export  Oriented  Units(‘EOU’)  scheme  /Special  Economic  Zones  (‘SEZ’) 

scheme  

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(a)  Legal basis 

(67)  The  details  of  these  schemes  are  contained  in  chapters  6  (EOU)  and  7  (SEZ) 

respectively of the EXIM-policy 2002-2007 and of the HOP I 2002-2007.  

(b)  Eligibility 

(68)  With  the  exception  of  pure  trading  companies,  all  enterprises  which,  in  principle, 
undertake to export their entire production of goods or services may be set up under 
the  SEZ  or  the  EOU  schemes.  One  company  was  found  to  benefit  from  the  EOU 
scheme during the IP. 

(c)  Practical implementation 

(69)  SEZ are specifically delineated duty free enclaves and considered by the EXIM-policy 

2002-2007 as foreign territory for the purpose of trade operations, duties and taxes. 

(70)  EOU  on  the  other  side,  are  geographically  more  flexible  and  can  be  established 

anywhere in India. This scheme is complementary to the SEZ.  

(71)  An application for EOU or SEZ status must include details for a period of the next five 
years on, inter alia, planned production quantities, projected value of exports, import 
requirements  and  indigenous  requirements.  If  the  authorities  accept  the  company’s 
application, the terms and conditions attached to the acceptance will be communicated 
to  the  company.  The  agreement  to  be  recognised  as  a  company  under  SEZ/EOU  is 
valid for a five-year period. The agreement may be renewed for further periods. 

(72)  A crucial obligation of an EOU or an SEZ as set out in the EXIM-policy 2002-2007 is 
to achieve net foreign exchange (‘NFE’) earnings, i.e. in a reference period (5 years) 
the total value of exports has to be higher than the total value of imported goods. 

(73)  EOU/SEZ units are entitled to the following concessions: 

(i) 

exemption  from  import  duties  on  all  types  of  goods  (including  capital  goods, 
raw  materials  and  consumables)  required  for  the  manufacture,  production, 
processing, or in connection therewith; 

(ii) 

exemption from excise duty on goods procured from indigenous sources; 

(iii)  reimbursement of central sales tax paid on goods procured locally; 

(iv) 

facility  to  sell  a  part  of  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; 

(v) 

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 
years period after starting its operations, but no longer than up to 2010; 

(vi)  possibility of 100% foreign equity ownership. 

EN 

17 

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(74)  Units  operating  under  these  schemes  are  bonded  under  the  surveillance  of  customs 
officials in accordance with Section 65 of the Customs Act. They are legally obliged 
to maintain, in a specified format, a proper account of all imports, of the consumption 
and  utilisation  of  all  imported  materials  and  of  the  exports  made.  These  documents 
should  be  submitted  periodically,  as  may  be  required,  to  the  competent  authorities 
(“quarterly and annual progress reports”). However, “at no point in time shall [an EOU 
or  a  SEZ  unit]  be  required  to  co-relate  every  import  consignment  with  its  exports, 
transfers to other units, sales in DTA or stocks”, as per paragraph 10.2 of appendix 14-
I and paragraph 13.2 of appendix 14-II of the HOP I 2002-2007.  

(75)  Domestic sales are dispatched and recorded on a self-certification basis. The dispatch 
process of export consignments of an EOU is supervised by a customs/excise official, 
who is permanently posted in the EOU. 

(76) 

In  the  present  case,  the  EOU  scheme  was  only  used  by  one  of  the  co-operating 
exporters during part  of  the  IP. As the SEZ scheme was not used, it is therefore not 
necessary to analyse the countervailability of this scheme. The co-operating exporter 
that  used  the  EOU  utilized  the  scheme  to  import  capital  goods  free  of  import  duties 
and to obtain reimbursement of the central sales tax  paid on goods  procured locally. 
This exporter did not make use of the exemption from import duties on raw materials, 
as the EOU facility, in order to produce PET film, uses PET chips as raw materials. 
These  PET  chips  are  produced  in  another  unit  of  this  company  from  raw  materials 
purchased under the ALS. Thus, the company availed of the benefits described under 
(i) and (iii) in recital (73) above. 

(d)  Disclosure comments 

(77)  One  company  which  availed  itself  of  benefits  under  the  EOU  made  comments  on 
certain  details  of  the  calculation  of  the  corresponding  subsidy  margins.  Where  these 
comments were found justified, calculations have been adjusted as a result. 

(e)  Conclusions on the EOU 

(78)  The exemption of an EOU from two types of import duties (“basic customs duty” and 
“special additional customs duty”) and the reimbursement of the central sales tax are a 
financial contribution 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 upon the EOU in the meaning of Article 
2(2)  of  the  basic  Regulation,  because  it  saved  liquidity  by  not  having  to  pay  duties 
normally due.  

(79)  Thus, the exemption from basic customs duty and special additional customs duty and 
the  sales  tax  reimbursement  constitute  subsidies  in  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 
Regulation. The export objective of an EOU as set out in paragraph 6.1 of the EXIM-
policy 2002-2007 is a condition sine qua non to obtain the incentives.  

(80) 

In  addition,  it  was  confirmed  that  the  GOI  has  no  effective  verification  system  or 
procedure in place to confirm whether and in what amounts duty and or sales tax free 
procured  inputs  were  consumed  in  the  production  of  the  exported  product  (Annex 

EN 

18 

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II(II)(4)  of  the  basic  Regulation  and,  in  the  case  of  substitution  drawback  schemes, 
Annex III(II)(2) of the basic Regulation). In addition, exemption from duties on capital 
goods is clearly not a permissible duty drawback scheme. 

(81)  The  GOI  did  not  carry  out  a  further  examination  based  on  actual  inputs  involved, 
although  this  would  normally  need  to  be  done  in  the  absence  of  an  effective 
verification system (Annex II(II)(5) and Annex III(II)(3) of the basic Regulation), nor 
did it prove that no excess remission took place.  

(f)  Calculation of the subsidy amount 

(82)  Accordingly, 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, both during the review investigation period. 

(i)  Reimbursement of central sales tax on revenue goods 

(83)  The numerator was established as follows. The subsidy amount for the exporter which 
used  this  scheme  was  calculated  on  the  basis  of  the  sales  tax  reimbursed  on  the 
purchases  made  for  the  production  sector,  i.e. inter  alia  parts  and  packing  materials, 
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.  

(84) 

In accordance with Article 7(2) of the basic Regulation this subsidy amount has been 
allocated  over  the  export  turnover  generated  by  all  export  sales  during  the  review 
investigation  period  as  appropriate  denominator,  because  the  subsidy  is  contingent 
upon  export  performance  and  it  was  not  granted  by  reference  to  the  quantities 
manufactured,  produced,  exported  or  transported.  The  subsidy  margin  thus  obtained 
was 0,02%. 

(85) 

(ii)  Exemption from import duties (basic customs duty and special additional 
customs duty) and reimbursement of central sales tax on capital goods 

In  accordance  with  Article  7(3)  of  the  basic  Regulation,  the  benefit  to  the  company 
utilising this scheme has been calculated on the basis of the amount of unpaid customs 
duty  on  imported  capital  goods  and  of  the  amount  of  sales  tax  reimbursed  on 
purchases  of  capital  goods,  both  spread  across  a  period  which  reflects  the  normal 
depreciation period of such capital goods in the industry of the product concerned. The 
amount so calculated which is then attributable to the IP 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.  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 7(3) of the basic Regulation this subsidy amount has 
been  allocated  over  the  export  turnover  generated  by  the  sector  during  the  review 
investigation  period  as  appropriate  denominator,  because  the  subsidy  is  contingent 
upon  export  performance  and  it  was  not  granted  by  reference  to  the  quantities 
manufactured,  produced,  exported  or  transported.  The  subsidy  margin  thus  obtained 
was 5,0%. 

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(86)  Thus,  the  total  subsidy  margin  under  the  EOU  scheme  for  the  company  concerned 

amounts to 5,0%. 

2.4.  Export Promotion Capital Goods scheme (‘EPCG’) 

(a)  Legal basis 

(87)  The  detailed  description  of  the  EPCG  is  contained  in  chapter  5  of  the  EXIM-policy 

2002-2007 and in chapter 5 of the HOP I 2002-2007.  

(b)  Eligibility 

(88)  Manufacturer-exporters,  merchant-exporters  “tied  to”  supporting  manufacturers  and 
service providers are eligible for this scheme. The four sampled companies were found 
to benefit from this scheme during the IP. 

(c)  Practical implementation 

(89)  Under  the  condition  of  an  export  obligation,  a  company  is  allowed  to  import  capital 
goods (new and - since April 2003 - second-hand capital goods up to 10 years old) at a 
reduced rate of duty. To this end the GOI issues upon application and payment of a fee 
an EPCG licence. Since April 2000 the scheme provides for a reduced import duty rate 
of  5%  applicable  to  all  capital  goods  imported  under  the  scheme.  Until  31  March 
2000, an effective duty rate of 11% (including a 10% surcharge) and, in case of high 
value imports, a zero duty rate were applicable. In order to meet the export obligation, 
the imported capital goods must be used to produce a certain amount of export goods 
during a certain period.  

(d)  Disclosure comments 

(90)  Further to disclosure, the GOI claimed that, when adding interest to determine the full 
amount of the benefit, there is no basis for the assumption that a company would have 
financed  the  entire  amount  of  additional  customs  duties  through  loans  and  that 
therefore the debt-equity ratio of each company in the investigation period should be 
taken into consideration and only a pro-rata amount should be used for the calculation. 

(91) 

It is considered that regardless of whether a company borrowed the money or used its 
own funds to finance its duties it would anyway incur a cost. In relation to borrowings, 
this  cost  is  the  interest  to  be  paid  thereon.  In  regard  to  own  funds,  the  cost  to  a 
company is investment interest foregone. The argument was therefore dismissed. 

(92)  Three companies which availed themselves  of  benefits  under the  EPCG  made  minor 
comments on certain details of the calculation of the corresponding subsidy margins. 
Where  these  comments  were  found  justified,  calculations  have  been  adjusted  as  a 
result. 

(e)  Conclusion on EPCG 

(93)  The  EPCG  provides  subsidies  within  the  meaning  of  Article  2(1)(a)(ii)  and  Article 
2(2) of the basic Regulation. The duty reduction constitutes a financial contribution by 
the  GOI,  since  this  concession  decreases  the  GOI’s  duty  revenue  which  would  be 

EN 

20 

   EN 

 
otherwise  due.  In  addition,  the  duty  reduction  confers  a  benefit  upon  the  exporter, 
because the duties saved upon importation improve the company’s liquidity. 

(94)  Furthermore,  the  EPCG  is  contingent  in  law  upon  export  performance,  since  such 
licences cannot be obtained without a commitment to export. Therefore it is deemed to 
be specific and countervailable under Article 3(4)(a) of the basic Regulation. 

(95)  This scheme cannot be considered a permissible duty drawback system or substitution 
drawback  system  within  the  meaning  of  Article  2(1)(a)(ii)  of  the  basic  Regulation. 
Capital goods are not covered by the scope of such permissible systems, as set out in 
Annex  I,  item  (i),  of  the  basic  Regulation,  because  they  are  not  consumed  in  the 
production of the exported products. 

(f)  Calculation of the subsidy amount 

(96)  The  numerator  was  established  as  follows.  The  subsidy  amount  was  calculated,  in 
accordance  with  Article  7(3)  of  the  basic  Regulation,  on  the  basis  of  the  unpaid 
customs  duty  on  imported  capital  goods  spread  across  a  period  which  reflects  the 
normal depreciation period of such capital goods in the PET film industry. Interest was 
added  to  this  amount  in  order  to  reflect  the  full  value  of  the  benefit  over  time.  Fees 
necessarily  incurred  to  obtain  the  subsidy  were  deducted  in  accordance  with  Article 
7(1)(a) of the basic Regulation.  

(97) 

In accordance with Article 7(2) and 7(3) of the basic Regulation this subsidy amount 
has been allocated over the export turnover during the review investigation period as 
appropriate denominator, because the subsidy is contingent upon export performance. 
The  subsidies  obtained  by  the  four  sampled  companies  ranged  between  1,3%  and 
2,7%. 

2.5.  Duty-Free Replenishment Certificate (‘DFRC’) 

(a)  Legal basis 

(98)  The legal basis for this scheme is contained in paragraphs 4.2.1 to 4.2.7 of the EXIM-

policy 2002-2007 and in paragraphs 4.31 to 4.36 of the HOP I 2002-2007.  

(b)  Practical implementation 

(99)  As none of the four sampled companies availed benefits under the DFRC, no further 

analysis of the countervailability of the DFRC is necessary. 

2.6.  Income Tax Exemption scheme (‘ITES’) 

(a)  Legal basis 

(100)  The legal basis for this scheme is contained in the Income Tax Act of 1961 (‘ITA’), 
which is amended yearly by the Finance Act. The latter sets out every year the basis 
for the collection of taxes as well as various exemptions and deductions which can be 
claimed. Exporting companies may claim income tax exemptions under sections 10A, 
10B, and 80HHC of the ITA. 

EN 

21 

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(b)  Practical implementation 

(101)  As none of the four sampled companies availed benefits under sections 10A and 10B 
of the ITA, no further analysis of the countervailability of sections 10A and 10B of the 
ITA is necessary. 

(102)  Two of the investigated exporters indicated that they received the benefit of a partial 
income tax exemption on profits derived from export sales during the IP under section 
80HHC of the ITA. However, given that this provision of the ITA was abolished from 
the financial year running from the 1st April 2004 to the 31st March 2005 onwards, it 
will  not  confer  any  benefit  on  the  applicant  after  31st  March  2004.  Benefits  under 
section  80HHC  of  the  ITA  shall  therefore  not  be  countervailed,  in  accordance  with 
Article 15(1) of the basic Regulation. 

2.7.  Export Credit scheme (‘ECS’) 

(a)  Legal basis 

(103)  The details of the scheme are set out in Master Circular IECD No. 5/04.02.01/2002-03 
(Export Credit in Foreign Currency) and Master Circular IECD No. 10/04.02.01/2003-
04 (Rupee Export Credit) of the Reserve Bank of India (‘RBI’), which is addressed to 
all commercial banks in India.  

(b)  Eligibility 

(104)  Manufacturing  exporters  and  merchant  exporters  are  eligible  for  this  scheme.  Three 

companies were found to benefit from this scheme during the IP. 

(c)  Practical implementation 

(105)  Under  this  scheme,  the  RBI  mandatorily  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”),  which  covers  credits 
provided to an exporter 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. 

(106)  As  a  result  of  these  RBI  Master  Circulars  exporters  can  obtain  export  credits  at 
preferential  interest  rates  compared  with  the  interest  rates  for  ordinary  commercial 
credits (“cash credits”), which are purely set under market conditions. 

(d)  Disclosure comments 

(107)  Two companies which were granted benefits under the ECS made minor comments on 
certain  details  of  the  calculation  of  the  corresponding  subsidy  margins.  Where  these 
comments were found justified, calculations have been adjusted as a result. 

EN 

22 

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(e)  Conclusion on the ECS 

(108)  Firstly, by lowering financing costs as compared with market interest rates, the above 
preferential interest rates confer a benefit in the meaning of Article 2(2) of the basic 
Regulation  on  such  exporter.  Despite  the  fact  that  the  preferential  credits  under  the 
ECS  are  granted  by  commercial  banks,  this  benefit  is  a  financial  contribution  by  a 
government in the meaning of Article 2(1)(iv) of the basic Regulation. The RBI is a 
public body, which falls therefore under the definition of a “government” as set out in 
Article  1(3)  of  the  basic  Regulation  and  it  instructs  commercial  banks  to  grant 
preferential financing to exporting companies. This preferential financing equates to a 
subsidy,  which  is  deemed  to  be  specific  and  countervailable  since  the  preferential 
interest  rates  are  contingent  upon  export  performance,  pursuant  to  Article  3(4)(a)  of 
the basic Regulation.  

(f)  Calculation of the subsidy amount 

(109)  The  subsidy  amount  has  been  calculated  on  the  basis  of  the  difference  between  the 
interest paid for export credits used during the IP and the amount that would have been 
payable if the same interest rates were applicable as for ordinary commercial credits 
used by the individual companies. This subsidy amount (numerator) has been allocated 
over the total export turnover during the review investigation period as the appropriate 
denominator in accordance with Article 7(2) 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  four  sampled 
companies  availed  of  benefits  under  the  ECS.  They  obtained  subsidies  of  between 
0,01% and 1,3%. 

2.8.  Capital Infusions 

(110)  As none of the four sampled companies availed benefits under this ad hoc scheme, no 

further analysis of its countervailability is necessary. 

3.  Regional Schemes 

3.1.  Package Scheme of Incentives of the Government of Uttar Pradesh 

(111)  It was found that none of the exporting producers made use of the Package Scheme of 

Incentives of the Government of Uttar Pradesh. 

3.2.  Package  Scheme  of  Incentives  (‘PSI’)  of  the  Government  of  Maharashtra 

(‘GOM’) 

(a)  Legal basis 

(112)  In  order  to  encourage  the  dispersal  of  industries  to  the  less  developed  areas  of  the 
State,  the  GOM  has  been  granting  incentives  to  new-expansion  units  set  up  in 
developing regions of the State, since 1964, under a scheme commonly known as the 
‘Package Scheme of Incentives’. The scheme has been amended several times since its 
introduction and the ‘1993 Scheme’ was operative from 1 October 1993 to 31 March 
2001 whereas the latest amendment, the ‘2001 Scheme’, was introduced on 31 March 
2001 and will be operative up to 31 March 2006. The PSI of the GOM is composed of 

EN 

23 

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several  sub-schemes  amongst  which  the  main  ones  are:  (i)  the  exemption  from  the 
local sales tax and (ii) the refund of the octroi tax. 

(b)  Eligibility 

(113)  In order to be eligible, companies must invest in less developed areas either by setting 
up  a  new  industrial  establishment  or  by  making  a  large  scale  capital  investment  in 
expansion  or  diversification  of  an  existing  industrial  establishment.  These  areas  are 
classified according to their economic development into different categories (e.g. less 
developed  area,  lesser  developed  area,  least  developed  area).  The  main  criterion  to 
establish  the  amount  of  incentives  is  the  area  in  which  the  enterprise  is  or  will  be 
located and the size of investment. 

(c)  Practical implementation 

(114)  Exemption from the local sales tax - Goods are normally subject to central sales tax 
(for  inter-state  sales)  or  State  sales  tax  (for  sales  within  the  State)  at  varying  levels 
depending  upon  the  State/States  in  which  transactions  are  being  made.  There  is  no 
sales tax on the import or export of goods, while domestic sales are subject to the sales 
tax  at  the  applicable  rates.  Under  the  exemption  scheme,  designated  units  are  not 
required to collect any sales tax on their sales transactions. Similarly, designated units 
are exempted from the payment of the local sales tax on their purchases of goods from 
a supplier itself eligible for the scheme. Whereas the sales transaction does not confer 
any  benefit  on  the  designated  selling  unit,  the  purchase  transaction  does  confer  a 
benefit to the designated purchasing unit. Two of the four sampled companies had one 
unit each eligible for the PSI of the GOM during the IP. Under the scheme, these two 
units  were  exempted  from  the  sales  tax  on  certain  of  their  domestic  purchases  made 
from suppliers eligible for the exemption scheme. 

(115)  Refund  of  the  octroi  tax  –  Octroi  is  a  tax  levied  by  local  Governments  in  India, 
including  the  GOM,  on  goods  that  enter  the  territorial  limits  of  a  town  or  a  district. 
Industrial enterprises are entitled to a refund of the octroi tax from the GOM, if their 
facility  is  located  in  certain  specified  towns  and  districts  within  the  territory  of  the 
State. The total amount that may be refunded is restricted to 100% of the fixed capital 
investment.  From  the  above  two  companies  with  a  unit  eligible  for  the  PSI  of  the 
GOM during the IP, only one was found to benefit from the refund of the octroi tax by 
the GOM. 

(d)  Disclosure comments 

(116)  One company which availed itself of benefits under the PSI of the GOM made minor 
comments  on  certain  details  of  the  calculation  of  the  corresponding  subsidy  margin. 
Where  these  comments  were  found  justified,  calculations  have  been  adjusted  as  a 
result. 

(e)  Conclusion on the PSI of the GOM 

(117)  The PSI of the GOM provides subsidies within the meaning of Article 2(1)(a)(ii) and 
Article 2(2) of the basic Regulation. The two sub-schemes examined above constitute 
a  financial  contribution  by  the  GOM,  since  this  concession  decreases  the  GOM’s 

EN 

24 

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revenue  which  would  be  otherwise  due.  In  addition,  this  exemption/refund  confers  a 
benefit upon the company as it improves the company’s liquidity. 

(118)  The scheme is only available to companies having invested within 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  specific  in  accordance  with  Article 
3(2)(a) and Article 3(3) of the basic Regulation and therefore countervailable. 

(f)  Calculation of the subsidy amount 

(119)  Concerning the sales tax exemption, the subsidy amount was calculated on the basis of 
the  amount  of  the  sales  tax  normally  due  during  the  review  investigation  period  but 
which remained unpaid under the scheme. Similarly, as far as octroi is concerned, the 
benefit to the exporter was calculated as the amount of the octroi tax refunded during 
the  IP.  Pursuant  to  Article  7(2)  of  the  basic  Regulation,  these  amounts  of  subsidy 
(numerator) have then been allocated over total sales during the review investigation 
period  as  the  appropriate  denominator,  because  the  subsidy  is  not  export  contingent 
and it was not granted by reference to the quantities manufactured, produced, exported 
or transported. During this period two companies benefited from these schemes. They 
both obtained subsidies of 1,6%.  

4.  Amount of countervailable subsidies 

(120)  The amount of countervailable subsidies determined in accordance with the provisions 
of  the  basic  Regulation,  expressed  ad  valorem,  for  the  investigated  exporting 
producers ranges between 11,7% and 15,2%. These amounts of subsidisation exceed 
the  de  minimis  threshold  mentioned  under  Article  14(5)(a)  and(b)  of  the  basic 
Regulation. 

(121)  It  is  therefore  considered  that,  pursuant  to  Article  18  of  the  basic  Regulation, 

subsidisation continued during the IP. 

SCHEME 

ALS 

DEPB 

EOU 

EPCG 

ECS 

PSI of 
the 
GOM 

Total 

COMPANY 

% 

% 

% 

% 

% 

% 

% 

Ester 
Industries Ltd. 

Flex  Industries 
Ltd. 

Garware 
Polyester Ltd. 

Jindal 
Films Ltd. 

Poly 

nil 

11,0 

nil 

1,3 

0,5 

nil 

12,8 

nil 

9,0 

nil 

2,7 

negl. 

nil 

11,7 

nil 

10,5 

nil 

1,5 

1,3 

1,6 

14,9 

6,0 

Nil 

5,0 

2,2 

0,4 

1,6 

15,2 

EN 

25 

   EN 

 
 
D. 

LIKELIHOOD OF CONTINUATION OR RECURRENCE OF 

SUBSIDISATION 

(122)  In accordance with Article 18(2) of the basic Regulation, it was examined whether the 
expiry of the measures in force would be likely to lead to a continuation or recurrence 
of subsidisation. 

(123)  It  was  established  that  during  the  IP,  the  sampled  Indian  exporters  of  the  product 
concerned  continued  to  benefit  from  countervailable  subsidisation  by  the  Indian 
authorities. With the exception of one company, the subsidy margins found during the 
review  are  higher  than  those  established  during  the  original  investigation.  While 
certain programmes that were countervailed in 1999 (like the DEPB pre-export) were 
discontinued, other programs that did not exist in 1999 (like the ALS) have been found 
to be countervailable in the present review. The subsidy schemes analysed above give 
recurring benefits. With the exception of the DEPB (see recital (54) above), there is no 
indication  that  these  programmes  will  be  phased  out  in  the  foreseeable  future. 
According to the GOI, the replacement scheme to the DEPB is planned to enter into 
force on the 1st April 2006 at the earliest. The situation arising from the replacement of 
the DEPB by an allegedly “WTO compatible” scheme on which the Commission has 
no information, will need to be assessed in due time. It is also noted that one of the co-
operating exporters that previously received benefits under the DEPB no longer did so 
in  the  IP  of  this  investigation  (see  recital  (33)  above).  This  exporter  has,  however, 
benefited from the ALS, which is also a type of duty drawback scheme, in the IP of 
the current investigation. In the event that the DEPB were to be abolished on 1 April 
2006  and  if  no  benefits  were  to  be  conferred  on  exporters  beyond  that  date,  it  is 
considered that there is, through the existence of an alternative countervailable subsidy 
scheme  (the  ALS),  a  likelihood  of  continuation  of  subsidisation  close  to  the  levels 
found  for  the  DEPB.  In  the  meantime,  the  exporters  of  the  product  concerned  will 
continue  to  receive  countervailable  subsidies.  Furthermore,  it  is  recalled  that  all 
exporters  of  the  product  concerned  are  eligible  for  a  number  of  the  programmes 
investigated.  In  these  circumstances,  it  was  considered  reasonable  to  conclude  that 
subsidisation would be likely to continue in the future. 

(124)  Since it has been demonstrated that subsidisation continued at the time of the review 
and  will  likely  continue  in  the  future,  the  issue  of  likelihood  of  recurrence  of 
subsidisation is irrelevant. 

E. 

COMMUNITY INDUSTRY 

1.  Community production 

(125)  Within  the  Community,  the  like  product  is  manufactured  by  10  producers  which 
constitute  the  total  Community  production  within  the  meaning  of  Article  9(1)  of  the 
basic Regulation.  

2.  Community industry 

(126)  It should be noted that in the original investigation the Community industry consisted 
of eight producers. The two new producers are based in the new Member States. Six of 
the  companies  did  not  support  the  request  and  did  not  co-operate  in  the  review 

EN 

26 

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investigation. The following four producers supported the complaint and agreed to co-
operate: 

– 

DuPont Teijin Films, 

–  Mitsubishi Polyester Film GmbH, 

– 

– 

Nuroll SpA, 

Toray Plastics Europe. 

(127)  These companies fully co-operated in the investigation. They accounted for 86% of the 

total Community production during the IP.  

(128)  It  is  therefore  considered  that  the  above  four  Community  producers  account  for  a 
major  proportion  of  the  total  Community  production  of  the  like  product.  The  above 
four Community producers are therefore deemed to constitute the Community industry 
within the meaning of Article 9(1) and Article 10(8) of the basic Regulation and will 
hereinafter be referred to as the ‘Community industry’. 

F. 

SITUATION ON THE COMMMUNITY MARKET 

1. 

Preliminary remark 

(129)  The  following  price  trends  are  based  on  Eurostat  import  prices  and  include  both 
conventional customs and anti-dumping duties, where applicable, and estimated post-
importation costs. 

2.  Consumption in the Community market 

(130)  Community  consumption  was  established  on  the  basis  of  the  sales  volumes  of  the 
Community industry on the Community market, Eurostat data for all EU imports, and 
the sales volumes of the other Community producers on the Community market. 

(131)  Between 2001 and the IP, Community consumption decreased by 7%. Specifically, it 
remained  broadly  stable  between  2001  and  2002,  dropped  by  6  percentage  points 
between 2002 and 2003, and ultimately declined by one percentage point in the IP. 

Total EC consumption (tonnes)
Index (2001=100)

2001
271 417

2002
271 787

2003
253 890

IP
251 491

100

100

94

93  

3. 

Imports from the country concerned 

(132)  The  volume  of  imports  originating  in  the  country  concerned  has  increased  by  107% 
over  the  period  considered  and  reached  a  level  of  12  679  tonnes  during  the  IP, 
corresponding to a market share of 5,0%. During the IP of the original investigation, 
the market share of the country concerned was 9,6%, but had fallen to 2,3% in 2001 
following the imposition of the measures. 

(133)  Prices  of  imports  from  the  country  concerned  increased  slightly,  by  2  percentage 
points,  between  2001  and  2003,  i.e.  after  the  imposition  of  the  definitive 
countervailing measures but thereafter decreased by 5 percentage points in the IP. 

EN 

27 

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(134)  On the basis of a model to model comparison, the investigation showed that imports 
from the country concerned were undercutting those of the Community industry by 2 
to 21% in the IP, depending on the co-operating exporter. This comparison was carried 
out  on  the  basis  of  the  actual  export  prices  of  the  co-operating  exporters  to  the 
Community.  The  investigations  referred  to  under  recitals  (5),  (6)  and  (7)  above 
evidenced  that  a  large  part  of  the  export  prices  to  the  Community  were  pegged  just 
above the Minimum Import Prices (‘MIPs’) established by the undertakings accepted 
in the context of the definitive anti-dumping measures (see recital (2) above) and that 
Indian export prices to other third countries were substantially lower than the prices to 
the Community. Therefore, if the undercutting calculations had been carried out on the 
basis  of  export  prices  to  other  third  countries,  the  undercutting  margins  would  have 
been larger than the ones just mentioned above. 

Volume of imports from the country concerned (tonnes)
Index (2001=100)
Market share of imports from the country concerned
Price of imports from the country concerned (EUR/tonne) 
Index (2001=100)

2001
6 129

2,3%
2 010

100

100

2002
7 738

2,8%
2 025

126

101

2003
11 520

4,5%
2 060

188

102

IP
12 679

5,0%
1 952

207

97  

(135)  The  investigation  referred  to  under  recital  (6)  above  came  to  the  conclusion  that 
undertakings  were  unsuitable  for  the  product  concerned  and  that  they  should  be 
withdrawn.  These  elements  explain  to  a  large  extent  the  trends  observed  above  as 
regards imports from India, and also the reason why the Community industry has not 
fully recovered from the past subsidisation (see recital (161) below). 

4. 

Imports found to be circumventing 

(136)  As  mentioned  in  recital  (4)  above,  it  was  further  found  that  circumvention  of  the 
original  measures  concerning  imports  from  India  took  place  respectively  via  Brazil 
and Israel. Consequently, the measures imposed on imports originating in India were 
extended in November 2004 to imports of the same PET film consigned from Brazil 
and  from  Israel,  whether  declared  as  originating  in  Brazil  or  Israel  or  not,  with  the 
exception  of  those  produced  by  a  genuine  Brazilian  producer  and  a  genuine  Israeli 
producer.  As  referred  to  under  recital  (8)  above,  a  second  Israeli  producer  was 
exempted  from  the  extended  measures.  The two  above  proceedings  evidenced  that  a 
very  limited  volume  of  imports  into  the  Community  from  Brazil  (around  10  tonnes) 
and Israel (around 180 tonnes) were attributed in 2003 to genuine Brazilian and Israeli 
producers.  It  should  be  recalled  that  the  date  of  the  above  extension  of  the  anti-
dumping  and  countervailing  measures  is  posterior  to  the  trends  described  under 
recitals (137) and (138) below. 

Volume of imports from Brazil (tonnes)
Market share of imports from Brazil
Price of imports from Brazil (EUR/tonne) 
Index (2001=100)
Volume of imports from Israel (tonnes)
Market share of imports from Israel
Price of imports from Israel (EUR/tonne) 
Index (2001=100)

2001
1 231

 776

0,5%

100

3 561

2002
2 533

2003
2 159

IP
1 225

0,9%

0,9%

0,5%

1 612

4 338

208

1 628

4 620

210

1 758

4 788

226

1,3%

1,6%

1,8%

1,9%

2 052

1 821

1 678

1 790

100

89

82

87  

(137)  The volume of imports from Brazil doubled between 2001 and 2002, declined slightly 
in 2003, and finally declined further in the IP to reach a level close to the one of 2001, 
potentially as a consequence of the initiation of the aforementioned anti-circumvention 
investigation  during  the  course  of  2004.  Similarly,  the  market  share  held  by  imports 

EN 

28 

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from  Brazil  increased  from  0,5%  in  2001  to  0,9%  in  2002  before  declining  to  0,5% 
during the IP. Imports from Brazil were made at very low prices in 2001. These import 
prices  increased  throughout  the  period  considered  to  reach  a  level  of  around  1  800 
EUR/tonne, that is slightly below import prices from India. 

(138)  The volume of imports from Israel rose steadily from around 3 600 tonnes in 2001 to 
around 4 800 tonnes in the IP. The market share held by imports from Israel increased 
from 1,3%  in 2001 to 1,9% in the IP. Import prices from Israel declined from around 
2  000  EUR/tonne  in  2001  to  around  1  800  EUR/tonne  in  the  IP.  Again,  the  Israeli 
export price during the IP is slightly below import prices from India. 

5. 

Imports from the Republic of Korea 

(139)  As  referred  to  under  recital  (2)  above,  the  Council  imposed  in  2001  definitive  anti-
dumping measures on imports of PET film originating in the Republic of Korea, in the 
form of ad valorem duty rates ranging between 0 and 13,4%. Quantities of PET film 
imported in the Community from the Republic of Korea declined from around 34 000 
tonnes  in  2001  to  around  23  200  tonnes  in  the  IP,  after  the  imposition  of  the  above 
measures.  The  market  share  held  by  Korean  products  declined  also  by  around  3 
percentage points between 2001 and the IP. Prices of Korean products declined by 7% 
between  2001  and  2002,  increased  by  3  percentage  points  in  2003,  and  by  a  further 
one percentage point in the IP. Based on Eurostat statistics, Korean export prices were 
consistently above Indian export prices, but below Community industry’s prices. 

Volume of imports from South Korea (tonnes)
Market share of imports from South Korea
Price of imports from South Korea (EUR/tonne) 
Index (2001=100)

6. 

Imports from other countries 

2001
34 002

2002
30 187

2003
25 631

IP
23 166

12,5%

11,1%

10,1%

9,2%

2 514

2 339

2 422

2 434

100

93

96

97  

(140)  The volume of imports from other third countries not mentioned above decreased from 
around  41 000 tonnes in  2001,  corresponding  to a market share of 15%, to around 
40  000  tonnes  in  the  IP,  corresponding  to  a  market  share  of  16%.  The  market  share 
increased  because  consumption  (the  denominator)  declined  more  than  the  above 
imports  (the  numerator).  Average  prices  of  imports  from  other  third  countries  not 
mentioned  above  first  increased  from  around  5  300  EUR/tonne  in  2001  to  around  6 
000 EUR/tonne in 2002, and then declined to around 4 800 EUR/tonne in the IP. Such 
prices are substantially above both Indian and Community industry’s prices. Amongst 
these  third  countries,  the  major  individual  exporting  country  to  the  Community  was 
the USA, with exported volumes of around 17 500 tonnes during the IP. Prices to the 
Community of imports from the USA (around 6 700 EUR/tonne in the IP) were also 
substantially  above  those  of  imports  from  the  country  concerned  and  above 
Community industry prices during the IP. 

Volume of imports from countries not mentioned above (tonnes)
Market share of imports from countries not mentioned above
Price of imports from countries not mentioned above (EUR/tonne) 
Index (2001=100)

2001
41 098

5 312

15%

100

2002
31 324

6 000

12%

113

2003
35 093

5 125

14%

96

IP
39 869

16%

4 803

90  

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G. 

ECONOMIC SITUATION OF THE COMMUNITY INDUSTRY  

(141)  Pursuant  to  Article  8(5)  of  the  basic  Regulation,  the  Commission  examined  all 
relevant economic factors and indices having a bearing on the state of the Community 
industry.  

1. 

Production 

(142)  The Community industry’s production increased by 10% in 2002 compared to 2001, 

before declining and remaining at the level of 2001 in the following years.  

Production (tonnes)
Index (2001=100)

2001
171 142

2002
187 620

2003
171 975

IP
169 288

100

110

100

99  

2.  Capacity and capacity utilisation rates 

(143)  Production  capacity  decreased  marginally  (by  3%)  between  2001  and  the  IP.  As 
production  remained  stable,  while  at  the  same  time  capacity  declined  slightly,  the 
resulting capacity utilisation slightly increased. 

Production capacity (tonnes)
Index (2001=100)
Capacity utilisation
Index (2001=100)

3. 

Stocks  

2001
200 037

2002
202 542

2003
190 393

100

101

95

86%

93%

90%

100

108

106

IP
193 888
97

87%

102  

(144)  The level of closing stocks of the Community industry, after a considerable increase in 
2002 compared to 2001, has steadily decreased since that year. In the IP, the level of 
stocks  was  28%  lower  than  in  2001.  However,  as  the  like  product  is  generally 
produced to order, the level of stocks is not very meaningful. 

Closing stock (tonnes)
Index (2001=100)

4. 

Sales volume  

2001
22 322

2002
31 479

2003
23 676

IP
16 090

100

141

106

72  

(145)  The  sales  by  the  Community  industry  on  the  Community  market  to  unrelated 
customers first increased in 2002, after the imposition of measures, but then decreased 
by 12 percentage points between 2002 and the IP. 

EC Sales volume to unrelated customers (tonnes)
Index (2001=100)

5.  Market share 

2001
142 173

2002
156 716

2003
141 959

IP
139 874

100

110

100

98  

(146)  The  market  share  held  by  the  Community  industry  declined  by  around  2  percentage 
points between 2001 and the IP. Specifically, the Community industry gained around 4 
percentage  points  in  2002,  after  the  imposition  of  both  countervailing  and  anti-
dumping measures, lost almost 5 percentage points in 2003 and finally lost a further 1 
percentage  point  in  the  IP.  The  trend  and  the  level  reached  showed  certain 

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improvement in relation to the ones observed prior to the imposition of countervailing 
measures, when the market share held by the Community industry had dropped from 
around 57% to around 50%. 

Market share of Community industry
Index (2001=100)

6.  Growth  

2001
61,6%

2002
65,3%

2003
60,6%

IP
59,5%

100

106

98

97  

(147)  Between  2001  and  the  IP,  the  Community  consumption  decreased  by  7%.  The 
Community  industry  lost  around  2  percentage  points  of  market  share,  whilst  the 
imports concerned gained 2,7 percentage point of market share. 

7. 

Employment 

(148)  The  level  of  employment  of  the  Community  industry  declined  by  8%  between  2001 

and the IP. 

Employment product concerned
Index (2001=100)

8. 

Productivity 

2001
2 323

2002
2 310

2003
2 235

IP
2 134

100

99

96

92  

(149)  Productivity  of  the  Community  industry's  workforce,  measured  as  output  per  person 

employed per year, increased by 8% between 2001 and the IP. 

Productivity (tonnes per employee)
Index (2001=100)

2001
74

2002
81

2003
77

100

110

104

IP
79

108  

9. 

Sales prices and factors affecting domestic prices 

(150)  Unit sales prices of the Community industry have increased by 4% between 2001 and 
the  IP.  This  price  development  is  broadly  in  line  with  that  of  the  cost  of  production 
and  of  the  principal  raw  material,  which  also  showed  a  rise  during  the  period 
considered. 

Unit price EC market (EUR/tonne)
Index (2001=100)

10.  Wages  

2001
3 010

2002
3 009

2003
3 130

IP
3 118

100

100

104

104  

(151)  Between 2001 and the IP, the average wage per employee increased by 12%, a figure 
that  exceeds  the  rate  of  increase  of  the  average  nominal  unit  labour  costs  (6%) 
observed during the same period in the Community economy at large.  

Annual labour cost per employee (000 EUR)
Index (2001=100)

2001
56

2002
60

2003
62

100

107

110

IP
63

112  

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11. 

Investments  

(152)  The  annual  flow  of  investments  in  the  product  concerned  made  by  the  Community 
industry has constantly decreased since 2002. The increase in 2002 can be explained 
by  investments  in  plant  and  machinery  for  one  producer  and  investment  to  facilitate 
the closure of certain production lines for another producer.  

Net investments (000 EUR)
Index (2001=100)

2001
33 446

2002
38 326

2003
34 979

IP
29 341

100

115

105

88  

12.  Profitability and return on investments 

(153)  Profitability  of  the Community industry, while showing a gradual  improvement over 
the  period  considered,  remained  negative  between  2001  (-5,2%)  and  the  IP  (-2,5%). 
The  return  on  investments  (ROI),  expressed  as  the  profit  in  percent  of  the  net  book 
value  of  investments,  broadly  followed  the  above  profitability  trend  over  the  whole 
period considered. 

Profitability of EC sales to unrelated customers (% of net sales)
ROI (profit in % of net book value of investments)

2001
-5,2%
-4,6%

2002
-1,9%
-1,9%

2003
-2,7%
-2,9%

IP
-2,5%
-2,9%

13.  Cash flow and ability to raise capital  

(154)  The  cash-flow  situation  deteriorated  between  2001  and  the  IP,  mainly  due  to  other 

non-cash items such as assets depreciation and inventory movements. 

Cash flow (000 EUR)
Index (2001=100)

2001
44 503

2002
42 047

2003
49 486

IP
32 150

100

94

111

72  

(155)  The  investigation  has  shown  that  capital  requirements  of  the  Community  producers 
have been adversely affected by their difficult financial situation. Although several of 
these companies are part of large companies, capital requirements are not always met 
to the desired level, as financial resources are generally allocated within these groups 
to the most profitable entities. This relative inability to raise capital can be linked to 
the declining investment documented under recital (152) above. 

14.  Magnitude of subsidisation  

(156)  As  concerns  the  impact  on  the  Community  industry  of  the  magnitude  of  the  actual 
subsidy  margins,  given  the  volume  and  the  prices  of  the  imports  from  the  country 
concerned, this impact cannot be considered to be negligible, especially in transparent 
and thus highly price sensitive markets like the one of the product concerned.  

15.  Recovery from the effects of past subsidisation and of past dumping  

(157)  While  the  indicators  examined  above  show  some  improvement  in  the  economic  and 
financial  situation  of  the  Community  industry,  further  to  the  imposition  of  definitive 
countervailing  measures  in  1999,  and  further  to  the  imposition  of  anti-dumping 
measures in 2001, they also evidence that the Community industry is still fragile and 
vulnerable. 

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32 

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16.  Conclusion 

(158)  As shown under recitals (132) to (135) above, the volume of imports from the country 
concerned has doubled between 2001 and the IP. Given that consumption declined by 
7%  over  the  same  period,  this  resulted  in  a  sharp  rise  of  the  market  share  held  by 
Indian exporters from 2,3% in 2001 to 5,0% during the IP. At the same time, Indian 
export prices to the Community remained relatively stable at a level of around 2 000 
EUR/tonne thereby undercutting substantially the prices of the Community industry. 

(159)  Between  2001  and  the  IP,  the  following  indicators  developed  positively:  capacity 
utilisation  and  productivity  of  the  Community  industry  increased  and  closing  stocks 
decreased. Unit sales prices increased in line with the cost of the raw material between 
2001  and  the  IP,  profitability  improved  but  remained  negative  in  the  IP,  as  well  as 
return on investment. Wages developed positively. 

(160)  Conversely,  the  following  indicators  developed  negatively:  the  market  share  held  by 
the  Community  industry  declined  marginally,  production  and  production  capacity 
declined,  sales  volumes  declined,  and  employment,  total  cash  flow  and  investments 
declined.  Therefore,  the  Community  industry  show  mixed  trends  since  2001:  while 
some  indicators  show  positive  developments,  a  number  of  others  show  a  negative 
trend.  

(161)  If one compares the above trends with the ones described in the Regulations imposing 
provisional and definitive countervailing measures, again the assessment is mixed. As 
concerns  market  share,  the  Community  industry  lost  around  2  percentage  points 
between 2001 and the IP, whilst it had lost almost 7 percentage points in the four years 
preceding  the  adoption  of  the  definitive  countervailing  measures.  It  can  therefore  be 
considered  that  measures  have  achieved  one  of  their  goal,  namely  to  slow  the 
deterioration  of  market  share.  On  the  other  hand,  the  profitability  of  the  Community 
industry  is  worse  in  the  IP  than  before  the  imposition  of  definitive  countervailing 
measures. Had the measures not been circumvented by imports from Brazil and Israel, 
the  situation  might  have  been  more  favourable.  It  is  further  reminded  that  the 
efficiency of the measures, and thereby their remedial effect on the injurious situation 
of the Community industry, was severely undermined by the fact that the undertakings 
did not properly function, as referred to under recital (135) above. 

(162)  It  is  therefore  concluded  that  the  situation  of  the  Community  industry  has  not 
improved  to  the  extent  that  could  have  been  expected  after  the  imposition  of  the 
definitive  countervailing  and  anti-dumping  measures.  The  Community  industry  is 
therefore still in a fragile situation. 

(163)  In  addition  to  the  circumvention  of  the  original  measures  and  the  fact  that  the 
undertaking  did  not  achieve  the  desired  effect,  it  was  also  analysed  whether  other 
factors,  like  e.g.  imports  from  other  countries,  or  a  hypothetical  inefficiency  of  the 
Community industry, could explain the persistent poor financial situation of the latter. 
In this respect it was found that it cannot be excluded that imports from the Republic 
of  Korea  and  the  decreasing  consumption  have  to  a  certain  extent  impacted  on  the 
fragile  situation.  But  these  two  factors  do  not  explain  in  isolation  the  Community 
industry’s  current  situation.  Moreover,  what  is  ultimately  relevant  is  how  the 
Community  industry  would  develop  in  the  absence  of  countervailing  measures  and 

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33 

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whether there is a likelihood of a recurrence of injury. This issue is examined in the 
subsequent section.  

(164)  Subsequent to the disclosure, two exporting producers claimed that the imports from 
the  USA,  the  increase  of  wages  of  the  Community  industry  and  the  decline  in 
Community consumption are factors having a significant effect for the fragile situation 
of  the  Community  industry.  Regarding  the  imports  from  the  USA,  it  is  recalled  (see 
recital  (140)),  that  prices  of  imports  from  this  country  were  on  average  substantially 
above  those  of  imports  from  the  country  concerned  and  also  above  Community 
industry prices during the IP. Moreover, it was established that the prices of imports 
from  this  country  were  substantially  higher  than  those  mentioned  above  during  the 
whole period considered. Therefore, it can be reasonably concluded that this factor did 
not  have  any  negative  effect  on  the  situation  of  the  Community  industry.  Regarding 
the  increase  in  the  wage  cost  per  employee  during  the  period  considered  (12%),  it 
should  be  noted  that  any  negative  effects  of  this  factor  on  the  situation  of  the 
Community  industry  are  to  a  large  extent  offset  by  the  parallel  drop  in  the  level  of 
employment  during  the  period  considered,  affecting  the  wage  bill  only  by  3,3%. 
Therefore,  the  claim  that  this  factor  had  a  significant  effect  on  the  situation  of  the 
Community industry could not be accepted. Regarding the decline in consumption, it 
is indeed acknowledged above that this factor may to a certain extent have impacted 
on  the  fragile  situation  of  the  Community  industry.  However,  this  factor  cannot  be 
considered significant given that the decline in sales volumes to unrelated customers 
by  the  Community  industry  was  merely  2%  in  contrast  to  the  7%  decline  in 
consumption. In the light of the findings set out in sections F and G, and on the basis 
of the above, it is concluded that imports from the USA  cannot have had a negative 
effect  on  the  situation  of  the  community  industry  and  that  the  other  two 
aforementioned factors could at best only have played a minor role. 

H. 

LIKELIHOOD OF CONTINUATION AND/OR RECURRENCE OF INJURY 

1. 

Preliminary remarks 

(165)  As  already  seen,  the  imposition  of  countervailing  measures  has  allowed  the 
Community industry to recover only to some extent from the injury suffered. Due to 
several  elements  mentioned  above,  it  is  still  in  a  fragile  and  vulnerable  situation. 
Different factors were therefore examined in order to determine if the situation of the 
Community  industry  would  stay  unchanged  improve  or  worsen  in  case  measures 
would be allowed to lapse. 

(166)  The examination of whether it would be likely that injury would continue and/or recur 
should measures be repealed was based in particular on information provided by the 
co-operating  exporting  producers.  Information  relating  to  the  import  prices  from 
exporters  other  than  the  co-operating  exporter,  determined  on  the  basis  of  Eurostat, 
was also examined. The pricing behaviour of the co-operating exporting producers to 
other export markets, export prices to the Community, production capacity and stocks 
were examined. Finally, the likely effect of a repeal of the measures on prices of other 
imports was also assessed. 

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34 

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2.  Relationship  between  export  volumes  and  prices  to  third  countries  and 

export volumes and prices to the Community  

(167)  It  was  found  that  the  average  export  price  of  Indian  sales  to  non-EU  countries  was 
significantly  below  the  average  export  price  to  the  Community  and  also  below  the 
prices on the domestic market. The Indian exporter’s sales to non-EU countries were 
made in significant quantities, accounting for 73% of total export sales. Therefore, it 
was considered that, should measures lapse, Indian exporters would have an incentive 
to  shift  significant  quantities  of  exports  from  other  third  countries  to  the  more 
attractive  Community  market,  at  price  levels,  which,  even  if  they  increased,  were 
likely to be still below the current price levels of export to the Community.  

3.  Unused capacity and stocks 

(168)  On  average,  the  co-operating  Indian  producers  had  significant  spare  capacities 
representing  almost  three  times  the  export  quantity  to  the  Community  during  the  IP. 
Likewise, average stocks of finished products are significant and, at the end of the IP, 
represented 16% of the volume exported to the Community. Therefore, the capacity to 
significantly increase export quantities to the EC exists, in particular because there are 
no  indications  that  third  country  markets  or  the  domestic  market  could  absorb  any 
additional production. In this regard, it should be noted that it is very unlikely that the 
domestic  market  in  India,  due  to  the  presence  of  at  least  four  other  competing 
producers, would be able to absorb all of the spare capacity of the four co-operating 
exporting producers. 

4.  Conclusion 

(169)  The  producers  in  the  country  concerned  have  therefore  the  potential  to  raise  and/or 
redirect  their  export  volumes  to  the  Community  market.  The  investigation  showed 
that,  on  the  basis  of  comparable  product  types,  the  cooperating  exporting  producers 
sold  the  product  concerned  at  a  lower  price  than  the  Community  industry's  (the 
undercutting margins range between 2 and 21%). These low prices would most likely 
continue to be charged or even decrease in line with the lower prices charged to the 
rest of the world, as mentioned in recital (134) above, also in order to regain the level 
of  market  shares  held  in  the  period  before  the  imposition  of  measures.  Such  a  price 
behaviour, coupled with the ability of the exporters in the country concerned to deliver 
significant quantities of the product concerned to the Community market, would in all 
likelihood have the effect of reinforcing the price-depressive trend on the market, with 
an expected negative impact on the economic situation of the Community industry. 

(170)  As  shown  above,  the  situation  of  the  Community  industry  remains  vulnerable  and 
fragile. It is likely that if the Community industry was exposed to increased volumes 
of  imports  from  the  country  concerned  at  subsidized  prices,  this  would  result  in  a 
deterioration  of  its  sales,  market  shares,  sales  prices  as  well  as  the  consequent 
deterioration of the financial situation, to the levels found in the original investigation. 
On  this  basis,  it  is  therefore  concluded,  that  the  repeal  of  the  measures  would  in  all 
likelihood result in a worsening of the already fragile situation and a recurrence of an 
even more injurious state of the Community industry.  

EN 

35 

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I. 

COMMUNITY INTEREST 

1. 

Introduction 

(171)  According to Article 31 of the basic Regulation, it was examined whether maintenance 
of  the  existing  countervailing  measures  would  be  against  the  interest  of  the 
Community as a whole. The determination of the Community interest was based on an 
appreciation of all the various interests involved.  

(172)  It should be recalled that, in the original investigation, the adoption of measures was 
considered not to be against the interest of the Community. Furthermore, the fact that 
the present investigation is a review, thus analysing a situation in which countervailing 
measures  have  already  been  in  place,  allows  the  assessment  of  any  undue  negative 
impact on the parties concerned by the current countervailing measures.  

(173)  On this basis it was examined whether, despite the conclusions on the likelihood of a 
continuation  or  recurrence  of  injurious  subsidisation,  compelling  reasons  existed 
which would lead to the conclusion that it is not in the Community interest to maintain 
measures in this particular case.  

2. 

Interest of the Community Industry 

(174)  The  Community  industry  has  proven  to  be  a  structurally  viable  industry.  This  was 
confirmed by its export sales that have remained stable at a high level since 2001 and 
the  positive  development  of  its  economic  situation  observed  after  the  imposition  of 
countervailing  measures  in  1999.  In  particular,  the  fact  that  the  Community  industry 
virtually  stopped  its  loss  of  market  share  in  the  few  years  before  the  IP  contrasts 
sharply  with  the  situation  preceding  the  imposition  of  the  measures.  Also,  the 
Community  industry  saw  its  losses  decrease  between  2001  and  the  IP.  It  is  further 
recalled that circumvention had been found by imports from Brazil and Israel and that 
the  undertaking  did  not  work  as  desired.  Had  these  developments  not  occurred,  the 
situation of the Community industry would have been even more favourable. 

(175)  It  can  reasonably  be  expected  that  the  Community  industry  will  continue  to  benefit 
from  the  measures  currently  imposed  and  further  recover,  probably  by  regaining 
market share and improving its profitability. Should the measures not be maintained, it 
is  likely  that  the  Community  industry  would  suffer  injury  to  a  higher  extent  from 
increased  imports  at  subsidized  prices  from  the  country  concerned  and  that  its 
currently poor financial situation will deteriorate further. 

3. 

Interest of importers/ users 

(176)  As  indicated  under  recital  (20)  above,  only  one  importing  company,  which  is  also  a 
user  of  the  product  concerned,  fully  co-operated  in  this  investigation.  For  reasons  of 
confidentiality,  exact  figures  concerning  this  importer/user  can  therefore  not  be 
disclosed. However, this importer/user is deemed to be representative of the situation 
of other importers/users in the Community because of its relatively high total turnover. 
This importer purchases the PET film from a variety of sources, which include India 
and  the  Community  industry.  This  company’s  resales  of  the  product  concerned 
originating  in  India  represented  less  than  20%  of  its  turnover  during  the  IP.  The 

EN 

36 

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profitability of the co-operating importer/user stood between 5 to 10% over turnover in 
the IP.  

(177)  It is further recalled that, in the original investigation, it was found that the impact of 
the  imposition  of  measures  would  not  be  significant  for  the  importers,  nor  for  the 
users.  Despite  the  existence  of  measures  for  five  years,  importers/users  in  the 
Community  continued  to  source  their  supply,  inter  alia,  from  India.  No  indications 
were  brought  forward  either  that  there  would  have  been  any  difficulties  in  finding 
other sources. Moreover, it is recalled that, as regards the effect of the imposition of 
measures  on  users,  it  was  concluded  in  the  original  investigation  that,  given  the 
negligible incidence of the cost of PET film on user industries, any cost increase was 
unlikely to have a significant effect on the user industry. No indications of the contrary 
were  found  after  the  imposition  of  measures.  It  is  therefore  concluded  that  the 
maintenance  of  the  countervailing  measures  is  not  likely  to  have  a  serious  effect  on 
importers/users in the Community. 

4. 

Interest of up-stream suppliers 

(178)  The original investigation concluded that suppliers of the Community industry would 
benefit  from  the  imposition  of  measures.  As  indicated  above,  only  one  supplier  co-
operated  to  the  investigation  and  confirms  this  fact,  as  it  almost  only  supplies  the 
Community producers and would suffer from a deterioration of its financial health. It 
is  therefore  considered  that  the  continuation  of  measures  would  continue  to  have  a 
positive impact for suppliers. 

5.  Conclusion 

(179)  Given the above, it is concluded that there are no compelling reasons on the grounds 
of Community interest against the maintenance of the current countervailing measures.  

J. 

COUNTERVAILING MEASURES 

(180)  All  parties  were  informed  of  the  essential  facts  and  considerations  on  the  basis  of 
which  it  is  intended  to  recommend  that  the  existing  measures  be  maintained.  They 
were also granted a period to make representations subsequent to this disclosure.  

(181)  It  follows  from  the  above  that,  as  provided  for  by  Article  21(2)  of  the  basic 
Regulation, the countervailing measures applicable to imports of PET film, originating 
in India should be maintained. It is recalled that these measures consist of ad valorem 
duties. 

(182)  As outlined under recital (4) above, the countervailing duties in force were extended to 
cover,  in  addition,  imports  of  PET  film  consigned  from  Brazil  and  Israel,  whether 
declared  as  originating  in  Brazil  or  Israel  or  not.  The  countervailing  measures  to  be 
maintained  on  imports  of  the  product  concerned,  as  set  out  in  recital  (181)  above, 
should be the measures as extended to imports of PET film consigned from Brazil and 
Israel,  whether  declared  as  originating  in  Brazil  or  Israel  or  not.  The  Brazilian  and 
Israeli  exporting  producers  who  were  exempted  from  the  measures  as  extended  by 
Regulation  (EC)  No  1976/2004  and  amended  by  Council  Regulation  (EC)  No 
101/2006 should also be exempted from the measures as imposed by this Regulation. 

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(183)  The individual company countervailing duty rates specified in this Regulation reflect 
the situation found during the review with respect to the co-operating exporters. Thus, 
they  are  solely  applicable  to  imports  of  the  product  concerned  produced  by  these 
companies  and  thus  by  the  specific  legal  entities  mentioned.  Imports  of  the  product 
concerned  manufactured  by  any  other  company  not  specifically  mentioned  in  the 
operative part of this Regulation with its name and address, including entities related 
to those specifically mentioned, cannot benefit from these rates and shall be subject to 
the duty rate applicable to “all other companies”.  

(184)  Any claim requesting the application of these individual countervailing duty rates (e.g. 
following  a  change  in  the  name  of  the  entity  or  following  the  setting  up  of  new 
production or sales entities) should be addressed to the Commission20 forthwith with 
all  relevant  information,  in  particular  any  modification  in  the  company’s  activities 
linked  to  production,  domestic  and  export  sales  associated  with,  for  instance,  that 
name  change  or  that  change  in  the  production  and  sales  entities.  If  appropriate,  and 
after  consultation  of  the  Advisory  Committee,  the  Regulation  will  be  amended 
accordingly by updating the list of companies benefiting from individual duty rates. 

(185)  In  order  to  ensure  proper  enforcement  of  the  countervailing  duty,  the  residual  duty 
level  should  not  only  apply  to  non-cooperating  exporters  but  also  apply  to  those 
companies  which  did  not  have  any  exports  during  the  IP.  However,  the  latter 
companies  are  invited,  when  they  fulfil  the  requirements  of  Article  20  of  the  basic 
Regulation, to present a request for a review pursuant to that Article in order to have 
their situation examined individually, 

HAS ADOPTED THIS REGULATION: 

Article 1 

1. 

A  definitive  countervailing  duty  is  hereby  imposed  on  imports  of  polyethylene 
terephthalate (PET) film falling within CN codes ex 3920 62 19 ( TARIC codes 3920 
62 19 03, 3920 62 19 06, 3920 62 19 09, 3920 62 19 13, 3920 62 19 16, 3920 62 19 
19, 3920 62 19 23, 3920 62 19 26, 3920 62 19 29, 3920 62 19 33, 3920 62 19 36, 
3920 62 19 39, 3920 62 19 43, 3920 62 19 46, 3920 62 19 49, 3920 62 19 53, 3920 
62 19 56, 3920 62 19 59, 3920 62 19 63, 3920 62 19 69, 3920 62 19 76 and 3920 62 
19  94)  and  ex  3920  62  90  (TARIC  codes  3920  62  90  33  and  3920  62  90  94), 
originating in India. 

2. 

The rate of duty applicable to the net free-at-Community-frontier price, before duty 
for  imports  produced  in  India  by  the  companies  listed  below,  shall  be  as  follows:

20 

European Commission, Directorate-General for Trade, Directorate B, J-79 5/17, B-1049 Brussels. 

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Country 

Company 

India 

India 

India 

India 

India 

India 

India 

Ester Industries Limited 
75-76, Amrit Nagar,  
Behind South Extension Part-1,  
New Delhi - 110 003, 
India 
Flex Industries Limited  
A-1, Sector 60,  
Noida 201 301 (U.P.),  
India 
Garware Polyester Limited 
Garware House,  
50-A, Swami Nityanand Marg,  
Vile Parle (East),  
Mumbai 400 057, 
India 

India Polyfilms Limited 
112 Indra Prakash Building 
21 Barakhamba Road 
New Delhi 110 001, 
India 

Jindal Poly Films Limited 
56 Hanuman Road, 
New Delhi 110 001, 
India 

MTZ Polyfilms Limited  
New India Centre, 5th floor,  
17 Co-operage Road,  
Mumbai 400 039, 
India 
Polyplex Corporation Limited  
B-37, Sector-1,  
Noida 201 301,  
Dist. Gautam Budh Nagar, Uttar 
Pradesh, 
India 

Definitive 
Duty 
(%) 
12,0 

TARIC 
Additional 
Code 
A026 

12,5 

A027 

3,8 

A028 

7,0 

A029 

7,0 

8,7 

A030 

A031 

19,1 

A032 

India 

All other companies 

19,1 

A999 

3. 

The  definitive  countervailing  duty  applicable  to  imports  from  India,  as  set  out  in 
paragraph  2,  is  hereby  extended  to  imports  of  the  same  polyethylene  terephthalate 
film  consigned  from  Brazil  and  consigned  from  Israel  (whether  declared  as 
originating in Brazil or Israel or not) (TARIC codes 

3920 62 19 01, 3920 62 19 04, 3920 62 19 07, 

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3920 62 19 11, 3920 62 19 14, 3920 62 19 17, 

3920 62 19 21, 3920 62 19 24, 3920 62 19 27, 

3920 62 19 31, 3920 62 19 34, 3920 62 19 37, 

3920 62 19 41, 3920 62 19 44, 3920 62 19 47, 

3920 62 19 51, 3920 62 19 54, 3920 62 19 57, 

3920 62 19 61, 3920 62 19 67, 3920 62 19 74, 

3920 62 19 92, 3920 62 90 31, 3920 62 90 92)  

with the exception of those produced by: 

Terphane  Ltda  BR  101,  km  101,  City  of  Cabo  de  Santo  Agostinho,  State  of 
Pernambuco, Brazil (TARIC additional code A569); 

Jolybar Filmtechnic Converting Ltd (1987), Hacharutsim str. 7, Ind. Park Siim 2000, 
Natania South, 42504, POB 8380, Israel (TARIC additional code A570); 

Hanita  Coatings  Rural  Cooperative  Association  Ltd.,  Kibbutz  Hanita,  22885,  Israel 
(TARIC additional code A691). 

4. 

Unless  otherwise  specified,  the  provisions  in  force  concerning  customs  duties  shall 
apply. 

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

Article 2 

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

Done at Brussels,  

For the Council 
The President 

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