Proposal for a Council Regulation amending Regulation (EC) No 367/2006 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 and amending Regulation (EC) No 1676/2001 imposing a definitive anti-dumping duty on imports of polyethylene terephthalate (PET) film originating, inter alia, in India
Date: 2006-07-28
Institutions: European Commission
Subjects: India, countervailing charge, import, originating product, plastics

COMMISSION OF THE EUROPEAN COMMUNITIES 

Brussels, 28.07.2006 
COM(2006) 426 final 

Proposal for a 

COUNCIL REGULATION 

amending Regulation (EC) No 367/2006 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 and amending 
Regulation (EC) No 1676/2001 imposing a definitive anti-dumping duty on imports of 
polyethylene terephthalate (PET) film originating, inter alia, in India 

(presented by the Commission) 

EN 

   EN 

 
 
 
  
EXPLANATORY MEMORANDUM 

1) 

CONTEXT OF THE PROPOSAL 

• 

Grounds for and objectives of the proposal 

This  proposal  concerns  the  application  of  Council  Regulation  (EC)  2026/97  of  6th 
October 1997 on protection against subsidised imports from countries not members of 
the European Community, as last amended by Council Regulation (EC) No 461/2004 
of 8th March 2004 (the ‘basic Regulation’) and Council Regulation (EC) No 384/96 of 
22nd  December  1995  on  protection  against  dumped  imports  from  countries  not 
members  of  the  European  Community,  as  last  amended  by  Council  Regulation  (EC) 
No  2117/2005  of  21st  December  2005  in  the  proceeding  concerning  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 

Council  Regulation  (EC)  No  1676/2001  imposing  definitive  anti-dumping  duties  on 
imports of PET film originating, inter alia, in India (OJ L 227, 23.8.2001, p.1), as last 
amended by Council Regulation (EC) No 366/2006 (OJ L 68, 8.3.2006, p.6). 

Council  Regulation  (EC)  No  367/2006  imposing  definitive  countervailing  duties  on 
imports of PET film originating in India following an expiry review pursuant to Article 
18 of Regulation EC (No) 2026/ 97 (OJ L 68, 8.3.2006, p.15). 

• 

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  opportunity  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 

The  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 

EN 

2 

   EN 

 
 
 
 
 
 
 
 
 
 
list of conditions that have to be assessed. 

3) 

LEGAL ELEMENTS OF THE PROPOSAL  

• 

Summary of the proposed action 

On  12th  July  2005,  the  Commission  initiated  a  partial  interim  review  of  the 
countervailing duties in force in respect of imports of polyethylene terephthalate (PET) 
film  originating  in  India.  The  purpose  of  this  review,  limited  in  scope  to  the 
examination  of  the  subsidisation  of  one  Indian  exporting  producer,  namely  Garware 
Polyester Limited (‘Garware’), was to assess whether the level of countervailing duties 
in force was sufficient to counteract the subsidisation causing injury. 

The  attached  proposal  to  increase  the  level  of  countervailing  duties  on  imports  of 
polyethylene  terephthalate  (PET)  film  from  India  is  based  on  the  findings  of  the 
investigation  which  confirmed  that  Garware  received  indeed  much  larger  levels  of 
subsidisation  than  those  established  in  the  original  investigation.  Thus,  it  is  proposed 
that  the  level  of  countervailing  duties  is  increased  in  accordance  with  the  findings  of 
this investigation, whereas the level of anti-dumping duties imposed on Garware PET 
film  imports  by  Regulation  (EC)  No  1676/2006,  as  amended  by  Regulation  (EC)  No 
366/2006, be reduced by the percentage of countervailing duties corresponding to the 
export subsidies found to have been received by the company in question. 

It is proposed, therefore, that the Council adopts the attached proposal for a Regulation, 
which should be published in the Official Journal of the European Union. 

• 

Legal basis 

Council  Regulation  (EC)  No  2026/1997  of  6th  October  1997  on  protection  against 
subsidised  imports  from  countries  not  members  of  the  European  Community,  as  last 
amended  by  Council  Regulation  (EC)  No  461/2004  of  8th  March  2004  and  Council 
Regulation  (EC)  No  384/96  of  22nd  December  1995  on  protection  against  dumped 
imports from countries not members of the European Community, as last amended by 
Council Regulation (EC) No 2117/2005 of 21st December 2005.  

• 

Subsidiary 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 basic Regulation and leaves no scope for national 
discretion. 

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

EN 

3 

   EN 

 
 
 
 
 
• 

Choice of instruments 

Proposed instruments: Regulation. 

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. 

EN 

4 

   EN 

 
 
 
 
 
 
Proposal for a 

COUNCIL REGULATION 

amending Regulation (EC) No 367/2006 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 and amending 
Regulation (EC) No 1676/2001 imposing a definitive anti-dumping duty on imports of 
polyethylene terephthalate (PET) film originating, inter alia, in India 

THE COUNCIL OF THE EUROPEAN UNION, 

Having regard to the Treaty establishing the European Community,  

Having regard to Council Regulation (EC) No 2026/1997 of 6th October 1997 on protection 
against  subsidised  imports  from  countries  not  members  of  the  European  Community1  (the 
‘basic Regulation’) and, in particular, Article 19 thereof, 

Having  regard  to  Council  Regulation  (EC)  No  384/96  of  22  December  1995  on  protection 
against  dumped  imports  from  countries  not  members  of  the  European  Community2  and,  in 
particular, Article 14(1) thereof, 

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

Whereas: 

I. 

Previous investigation and existing measures 

A. PROCEDURE 

(1) 

The  Council,  by  Regulation  (EC)  No  2597/1999  of  6  December  19993,  imposed  a 
definitive  countervailing  duty  on  imports  of  polyethylene  terephthalate  (‘PET’)  film 
(the ‘product concerned’) falling within CN codes ex 3920 62 19 and ex 3920 62 90, 
originating in India. The investigation which led to the adoption of that Regulation is 
hereinafter referred as to the ‘original investigation’. 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 
of the product concerned from all other companies. The countervailing duty imposed 
on PET film manufactured and exported by Garware Polyester Limited (‘Garware’ or 

1 

2 

3 

OJ L 288, 21.10.1997, p. 1, as last amended by Council Regulation (EC) No 461/2004 of 8 March 2004 
(OJ L 77, 13.3.2004, p.12). 
OJ L 56, 6.3.1996, p. 1., as last amended by Council Regulation (EC) No 2117/2005 of 21 December 
2005 (OJ L 340, 23.12.2005, p. 17). 
OJ L 316, 10.12.1999, p. 1. 

EN 

5 

   EN 

 
                                                 
(2) 

(3) 

‘the company’) was 3,8 %. The original investigation period was 1st October 1997 to 
30th September 1998. 

The Council, by Regulation (EC) No 367/2006 of 27 February 20064, maintained the 
definitive countervailing duty imposed by Regulation (EC) No 2597/1999 on imports 
of PET film originating in India, following an expiry review pursuant to Article 18 of 
the basic Regulation. 

The  Council,  by  Regulation  (EC),  No  366/2006  of  27  February  20065,  amended 
Regulation (EC) No 1676/2001 of 13 August 20016 following a partial interim review 
of the level of anti-dumping duty in force against five Indian producers and imposed 
an anti-dumping duty ranging from 0 % to 18 %. The anti-dumping duty imposed on 
imports of PET film from Garware was 17,4 %. It is noted that the anti-dumping duty 
rate  for  Garware  was  adjusted  to  take  into  account  the  level  of  subsidisation 
countervailed by Regulation (EC) No 367/2006 (see also recital (71) below). 

II. 

Request for a partial interim review 

(4) 

(5) 

A  request  for  a  partial  interim  review  of  Council  Regulation  (EC)  No  2597/1999, 
limited  to  the  level  of  countervailing  duty  imposed  on  Garware  was  lodged  by  the 
following  Community  producers:  DuPont  Teijin  Films,  Mitsubishi  Polyester  Film 
GmbH,  Nuroll  SpA  and  Toray  Plastics  Europe  (the  ‘applicants’).  The  applicants 
represent a major proportion of the Community production of PET film.  

The applicants alleged that, in regard to imports of PET film from Garware, the level 
of  existing  countervailing  measures  was  no  longer  sufficient  to  counteract  the 
injurious  subsidisation,  as  the  circumstances  regarding  the  subsidisation  of  Garware 
had changed significantly. 

III. 

Investigation 

(6) 

(7) 

(8) 

Having determined, after consulting the Advisory Committee, that sufficient evidence 
existed to justify the initiation of a partial interim review, the Commission announced 
on  12th  July  2005,  by  a  notice  of  initiation  published  in  the  Official  Journal  of  the 
European Union7, the initiation of a partial interim review, in accordance with Article 
19 of the basic Regulation. 

The  review  is  limited  in  scope  to  the  examination  of  subsidisation  of  one  exporting 
producer,  Garware,  in  order  to  assess  the  need  for  continuation,  removal  or 
amendment  of  the  level  of  the  existing  measures.  The  investigation  period  ran  from 
1st April 2004 to 31st March 2005. 

The Commission officially advised the exporting producer concerned, the Government 
of  India  ('GOI')  and  the  applicants  of  the  initiation  of  the  partial  interim  review. 
Interested  parties  were  given  the  opportunity  to  make  their  views  known  in  writing 
and to request a hearing within the time limit set in the notice of initiation. 

4 
5 
6 
7 

OJ L 68, 8.3.2006, p. 15. 
OJ L 68, 8.3.2006, p. 6. 
OJ L 227, 23.8.2001, p. 1. 
OJ C 172, 12.7.2005, p. 5. 

EN 

6 

   EN 

 
                                                 
(9) 

In order to obtain the information necessary for its investigation, the Commission sent 
a  questionnaire  to  Garware,  which  cooperated  by  replying  to  the  questionnaire.  A 
verification visit was carried out at Garware’s premises in India. 

(10)  Garware,  the  GOI  and  the  applicants  were  informed  of  the  essential  results  of  the 

investigation and had the opportunity to comment (see recital (73) below).  

B. PRODUCT CONCERNED AND LIKE PRODUCT 

I. 

Product concerned 

(11)  The  product  concerned  is,  as  defined  in  the  original  investigation,  polyethylene 
terephthalate  (PET)  film,  originating  in  India,  normally  declared  under  CN  codes  ex 
3920 62 19. 

II. 

Like product 

(12)  As  in  the  original  investigation,  it  was  found  that  PET  film  produced  and  sold  by 
Garware  on  the  domestic  market  in  India  and  PET  film  exported  to  the  Community 
from  India  have  the  same  basic  physical  and  technical  characteristics  and  uses. 
Therefore,  they  are  like  products  within  the  meaning  of  Article  1(5)  of  the  basic 
Regulation. 

I. 

Introduction 

C. SUBSIDIES 

(13)  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: 

(a) 

Nationwide Schemes: 

i 

ii 

Advance Licence Scheme/ Advance Release Order; 

Duty Entitlement Passbook Scheme; 

iii 

Special Economic Zones/ Export Oriented Units Scheme; 

iv 

Export Promotion Capital Goods Scheme; 

v 

Income Tax Schemes 

• 

• 

Export Income Tax Exemption Scheme 

Income Tax Incentive for Research and Development 

vi 

Export Credit Scheme 

vii  Duty-Free Replenishment Certificate  

(14)  The schemes (i) to (iv) and (vii) above are based on the Foreign Trade (Development 
and  Regulation)  Act  1992  (No  22  of  1992)  which  entered  into  force  on 

EN 

7 

   EN 

 
7th August 1992 (the ‘Foreign Trade Act’). The Foreign Trade Act authorises the GOI 
to issue notifications regarding export and import policy. A five-year plan relating to 
export  and  import  policy  for  the  period  1st  April  2002  to  31st  March  2007  was 
published by the GOI (‘EXIM policy 2002-07’). In addition, a handbook of procedures 
governing the EXIM policy 2002-07 (‘HOP I 2002-07’) was published by the GOI and 
is updated on a regular basis8. 

(15)  The  Income  Tax  Schemes  specified  in  (v)  above  are  based  on  the  Income  Tax  Act 

1961, which is amended annually by the Finance Act. 

(16)  The Export Credit Scheme specified in (vi) above is based on sections 21 and 35A of 
the Banking Regulation Act 1949, which allows the Reserve Bank of India to instruct 
commercial banks regarding export credits. 

(b) 

Regional Schemes  

(17)  On the basis of the information contained in the review request and the replies to the 
Commission’s questionnaire, the Commission also investigated the package scheme of 
incentives  (hereinafter,  the  ‘PSI’)  of  the  Government  of  Maharashtra  (the  ‘GOM’) 
1992. This scheme is based on resolutions of the GOM Industries, Energy and Labour 
Department. 

II. 

Nationwide Schemes 

1. 

Advance Licence Scheme (‘ALS’)/ Advance Release Order (‘ARO’) 

(a) 

Legal Basis 

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

EXIM policy 2002-07 and chapters 4.1 to 4.30 of the HOP I 2002-07. 

(b) 

Eligibility 

(19)  Garware  was  not  found  to  be  using  the  ALS/ARO  during  the  investigation  period, 
therefore no further analysis of the countervailability of this scheme is necessary. 

2. 

Duty Entitlement Passbook Scheme (‘DEPBS’) 

(a) 

Legal Basis 

(20)  A  detailed  description  of  DEPBS  is  contained  in  paragraph  4.3  of  the  EXIM  policy 
2002-07 and in chapter 4 of HOP I 2002-07. At the time of the original investigation, 
two forms of DEPB existed: pre-export and post-export. In April 2000, the pre-export 
form  of  DEPB  was  discontinued  and  therefore  only  the  post-export  form  was 
investigated in the current review. 

8 

Notification No 1/2002-07 of 31.03.2002 of the Ministry of Commerce and Industry of the Government 
of India. 

EN 

8 

   EN 

 
                                                 
(b) 

Eligibility 

(21)  Any manufacturer-exporter or merchant-exporter is eligible for this scheme. Garware 

was found to benefit from this scheme during the investigation period. 

(c) 

Practical Implementation 

(22)  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  standard  input-output  norms 
(‘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. 

(23)  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  DEPBS.  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  DEPBS  credit  which  is  to  be  granted  for  that  export  transaction.  At  this 
point  in  time,  the  exporter  knows  the  benefit  he  will  receive.  Once  the  customs 
authorities issue an export shipping bill, the GOI has no discretion over the granting of 
a  DEPBS  credit.  The  relevant  DEPBS  rate  to  calculate  the  benefit  is  that  which 
applied at the time the export declaration was made. Therefore, there is no possibility 
of a retroactive amendment to the level of the benefit. 

(24) 

It was also found that, in accordance with Indian accounting standards, DEPBS credits 
can  be  booked  on  an  accruals  basis  as  income  in  the  commercial  accounts,  upon 
fulfilment of the export obligation. 

(25)  Such credits may 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 otherwise used. 

(26)  DEPBS  credits  are  freely  transferable  and  valid  for  a  period  of  12  months  from  the 

date of issue. 

(27)  An  application  for  DEPBS  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  DEPBS  exist,  because  the  time  periods  mentioned  in  chapter 
4.47  HOP  I  2002-07  are  always  counted  from  the  most  recent  export  transaction 
included in a given DEPBS application. 

(28)  The company brought to the Commission’s attention that this scheme would soon be 
discontinued and be replaced by an allegedly “WTO compatible” scheme with effect 
from  1st  April  2006.  The  DEPB  was  originally  planned  to  expire  on  1st  April  2005. 
However,  as  the  replacement  scheme  was  not  ready  to  be  implemented  by  that  date, 
the  DEPBS  was  prolonged  until  1st  April  2006.  No  confirmation  was  given  by  the 
company whether this new scheme has finally entered into force after the latter date. In 
any event, this alleged change would fall outside the review investigation period. 

EN 

9 

   EN 

 
(d) 

Conclusions on DEPBS 

(29)  The  DEPBS  provides  subsidies  within  the  meaning  of  Article  2(1)(a)(ii)  and  Article 
(2)2 of the basic Regulation. A DEPBS credit is a financial contribution by the GOI, 
since  the  credit  will  eventually  be  used  to  offset  import  duties,  thus  decreasing  the 
GOI’s  duty  revenue  which  would  otherwise  be  due.  In  addition,  the  DEPBS  credit 
confers a benefit upon the exporter, because it improves the liquidity of the company. 

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

(31)  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), Annex I and Annexes II and III of the basic Regulation. 
Lastly, an exporter is eligible for DEPBS 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 their inputs locally and do not import any goods which can 
be used as inputs are still entitled to benefit from DEPBS. 

(e) 

Calculation of the subsidy amount 

(32) 

(33) 

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. 

In  light  of  the  above,  it  is  considered  appropriate  to  assess  the  benefit  under  the 
DEPBS as being the sum of the credits earned on all export transactions made under 
this  scheme  during  the  investigation  period.  The  company  submitted  that  the  rate 
applicable  to  the  DEPBS  has  been  reduced  from  11  %  to  8  %  with  effect  from 
26th May 2005, i.e., this alleged change falls outside the review investigation period; 
therefore, the effects and relevance of this change could not be verified and this claim 
must be rejected in accordance with Article 5 of the basic Regulation. 

(34)  Fees  necessarily  incurred  to  obtain  the  subsidy  were  deducted  from  the  credits 
received to arrive at the subsidy amount as the numerator, pursuant to Article 7(1)(a) 
of the basic Regulation. 

EN 

10 

   EN 

 
(35) 

In accordance with Article 7(2) of the basic Regulation, the subsidy amount has been 
allocated over the total export turnover during the review investigation period as the 
appropriate  denominator,  as  the  subsidy  is  contingent  on  export  performance  and  it 
was  not  granted  by  reference  to  the  quantities  manufactured,  produced,  exported  or 
transported.  Garware  benefited  from  this  scheme  during  the  investigation  period  and 
obtained a subsidy of 10,3 %. 

3. 

Export Oriented Unit Scheme (‘EOUS’)/ Special Economic Zones Scheme (‘SEZS’) 

(a) 

Legal Basis 

(36)  The  details  of  these  schemes  are  contained  in  chapters  6  (EOUS)  and  7  (SEZS) 

respectively of the EXIM policy 2002-07 and HOP I 2002-07. 

(b) 

Eligibility 

(37)  Garware  was  not  found  to  be  set  up  under  either  of  these  schemes  during  the 
investigation  period,  therefore  no  further  analysis  of  their  countervailability  is 
necessary. 

4. 

Export Promotion Capital Goods Scheme (‘EPCGS’) 

(a) 

Legal Basis 

(38)  A detailed description of the EPCGS can be found in Chapter 5, EXIM Policy 2002-07 

and in Chapter 5, HOP I 2002-07. 

(b) 

Eligibility 

(39)  Any manufacturer-exporter and merchant-exporter “tied to” a supporting manufacturer 
or service provider is eligible for this scheme. Garware was found to benefit from this 
scheme during the investigation period. 

(c) 

Practical Implementation 

(40)  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 the 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. 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) 

Conclusion on the EPCGS 

(41)  The  EPCGS  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 
otherwise be due. In addition, the duty reduction confers a benefit upon the exporter 
because the duties saved upon importation improve its liquidity. 

EN 

11 

   EN 

 
 
(42)  Further, the EPCGS is contingent in law upon export performance, since such licences 
can  not  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. 

(43)  The 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. 

(e) 

Calculation of the subsidy amount 

(44)  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 unpaid customs 
duty  on  imported  capital  goods  spread  over  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. 

(45) 

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 
the  appropriate  denominator,  as  the  subsidy  is  contingent  upon  export  performance. 
The subsidy obtained by Garware is 1,8 %. 

5. 

Income Tax Exemption Scheme (‘ITES’) 

(a) 

Legal basis 

(46)  The  legal  basis  for  this  scheme  is  contained  in  the  Income  Tax  Act  1961,  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 Income Tax Act 1961. 

(b) 

Practical implementation 

(47)  As Garware was not found to have availed of any benefits under the ITES, no further 

analysis of the countervailability of this scheme is necessary. 

6. 

Export Credit Scheme (‘ECS’) 

(a) 

Legal basis 

(48)  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. 

EN 

12 

   EN 

 
(b) 

Eligibility 

(49)  Manufacturing exporters and merchant exporters are eligible for this scheme. Garware 

was found to benefit from this scheme during the investigation period. 

(c) 

Practical implementation 

(50)  Under  this  scheme,  the  RBI  sets  mandatory  ceilings  on  interest  rates  applicable  to 
export credits, both in Indian rupees and in foreign exchange, 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  for  financing  export  receivables.  The  RBI  also 
directs the banks to provide a certain amount of their net bank credit towards export 
finance. 

(51)  As  a  result  of  these  RBI  Master  Circulars,  exporters  can  obtain  export  credit  at 
preferential interest rates compared to the interest rates on ordinary commercial credit 
(cash credits), which are set under market conditions. 

(d) 

Conclusion on the ECS 

(52)  Firstly, by lowering financing costs as compared with market interest rates, the above 
preferential  interest  rates  confer  a  benefit  within  the  meaning  of  Article  2(2)  of  the 
basic Regulation on such exporters. Despite the fact that the preferential credits under 
the ECS are granted by commercial banks, this benefit is a financial contribution by a 
government within the meaning of Article 2(1)(iv) of the basic Regulation. The RBI is 
a  public  body,  falling,  therefore,  within  the  definition  of  a  “government”  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 amounts 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. 

(e) 

Calculation of the subsidy amount 

(53)  The  subsidy  amount  has  been  calculated  on  the  basis  of  the  difference  between  the 
interest  paid  for  export  credits  used  during  the  investigation  period  and  the  amount 
that  would  have  been  payable  if  market  interest  rates  were  charged,  as  for  ordinary 
commercial  credits  used  by  the  company.  The  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)  of  the  basic  Regulation,  as 
the subsidy is contingent upon export performance and is not granted by reference to 
quantities  manufactured,  produced,  exported  or  transported.  Garware  availed  of 
benefits under the ECS and obtained a subsidy of 1,2 %. 

EN 

13 

   EN 

 
 
7. 

Duty-Free Replenishment Certificate (‘DFRC’) 

(a) 

Legal basis 

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

Policy 2002-07 and in paragraphs 4.31 to 4.36 of the HOP I 2002-07. 

(b) 

Practical Implementation 

(55)  As Garware was not found to have availed of any benefits under the DFRC, no further 

analysis of the countervailability of this scheme is necessary. 

III.  Regional Schemes 

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

(a) 

Legal basis 

(56) 

In order to encourage the dispersal of industries to 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  1st  October  1993  to 
31st March  2001,  whereas  the  latest  amendment,  the  “2001  scheme”,  was  introduced 
on 31st March 2001 and foreseen to be operative up to 31st March 2006. The PSI of the 
GOM is composed of several sub-schemes, the main being the exemption from local 
sales tax and the refund of octroi tax. 

(b) 

Eligibility 

(57) 

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 the investment. 

(c) 

Practical implementation 

(58)  Exemption  from  local  sales  tax:  Goods  are  normally  subject  to  central  sales  tax  (for 
inter-State sales) or State sales tax (for intra-State sales) at varying levels, depending 
upon  the  State(s)  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  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. Garware was found to have benefited from 
this exemption during the investigation period. 

EN 

14 

   EN 

 
 
(59)  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  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.  Garware  was  found  to  have  benefited  from  this  refund  during  the 
investigation period. 

(d) 

Conclusion on the PSI of the GOM 

(60)  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  constitute  a 
financial  contribution  by  the  GOM,  since  this  concession  decreases  the  GOM’s 
revenue  which  would  be  otherwise  due.  In  addition,  this  exemption/refund  confers  a 
benefit upon the company, as it improves its liquidity. 

(61)  The company submitted that the sales tax was abolished on 1st April 2005 and that the 
GOM has since introduced a “Value Added Tax” regime, under which the company is 
obliged to pay the full rate. However, this alleged change occurred after the end of the 
investigation  period,  therefore  the  effects  and  relevance  of  this  change  could  not  be 
verified. In any event, no relevant evidence was submitted relating to the regime and 
the  company’s  obligations  thereunder.  In  accordance  with  Article  5  of  the  basic 
Regulation, this claim has to be rejected. 

(62)  The  scheme  is  only  available  to  companies  which  have  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 
Articles 3(2)(a) and 3(3) of the basic Regulation and therefore countervailable. 

(e) 

Calculation of the subsidy amount 

(63)  Concerning the tax exemption, the subsidy amount was calculated on the basis of the 
amount  of  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  octroi  tax  refunded  during  the 
investigation period. Pursuant to Article 7(2) of the basic Regulation, these amounts of 
subsidy  (numerator)  have  then  been  allocated  over  the  total  sales  during  the  review 
investigation  period  as  the  appropriate  denominator,  as  the  subsidy  is  not  export 
contingent  and  it  was  not  granted  by  reference  to  the  quantities  manufactured, 
produced,  exported  or  transported.  During  this  period,  Garware  benefited  from  these 
schemes and obtained subsidies of 1,6 %. 

IV.  Amount of Countervailable Subsidies 

(64)  The  amount  of  countervailable  subsidies  determined  in  accordance  with  the  basic 
Regulation, expressed ad valorem, for the investigated exporting producer is 14,9 %. 
This  amount  of  subsidisation  exceeds  the  de  minimis  threshold  mentioned  under 
Article 14(5) of the basic Regulation. 

EN 

15 

   EN 

 
SCHEME 

DEPB 

EPCG 

ECS 

Garware 

% 

10,3 

% 

1,8 

% 

1,2 

PSI of 
GOM 

% 

1,6 

TOTAL 

% 

14,9 

(65) 

It  is  therefore  considered  that,  pursuant  to  Article  19  of  the  basic  Regulation,  the 
measures currently in force are no longer sufficient to counteract the countervailable 
subsidies which are causing the injury to the Community industry. 

V. 

Lasting nature of changed circumstances with regard to subsidisation 

(66) 

(67) 

In accordance with Article 19(2) of the basic Regulation, it was examined whether the 
continuation  of  the  existing  measure  would  not  be  sufficient  to  counteract  the 
countervailable subsidy which is causing injury.  

It was established that, during the investigation period, Garware continued to benefit 
from countervailable subsidisation by the Indian authorities. Further, the subsidy rate 
found  during  this  review  is  considerably  higher  than  that  established  during  the 
original  investigation.  The  subsidy  schemes  analysed  above  give  recurring  benefits. 
With the exception of the DEPBS and the Sales Tax refund, there is no allegation that 
these programmes will be phased out in the foreseeable future. According to Garware, 
a replacement scheme to the DEPBS was planned to enter into force on 1st April 2006. 
No  confirmation  was  given  by  the  company  whether  this  in  fact  took  place.  The 
situation  arising  from  the  replacement  of  the  DEBPS  by  an  allegedly  “WTO 
compatible”  scheme,  on  which  the  Commission  has  no  information,  will  have  to  be 
assessed in due time. In the absence of any substantiated evidence of the replacement 
of the DEBPS, it is considered that, for the need of the present review, the DEPBS is 
still  in  place.  Similarly,  the  company  did  not  provide  any  details  of  the  “VAT-like” 
scheme  which  allegedly  replaced  the  Sales  Tax  in  the  GOM  after  the  end  of  the 
investigation  period  and  therefore  it  was  considered  that,  for  the  need  of  the  present 
review, the Sales Tax scheme is still in place.  

(68)  Since  it  has  been  demonstrated  that  the  company  is  in  receipt  of  much  higher 
subsidisation  than  before  and  that  it  is  likely  to  continue  to  receive  subsidies  of  an 
amount  higher  than  determined  in  the  original  investigation,  it  is  concluded  that  the 
continuation of the existing measure is not sufficient to counteract the countervailable 
subsidy causing injury and that the level of the measures should therefore be amended 
to reflect the new findings. 

VI.  Conclusion 

(69) 

In view of the conclusions reached with regard to the level of subsidisation of Garware 
and  the  insufficiency  of  the  current  measures  to  counteract  the  countervailable 
subsidies found, the countervailing duty on Garware imports of the product concerned 
should be amended in order to reflect the new subsidisation levels found. 

(70)  The amended countervailing duty set out in recital (72) below was established at the 
new  rate  of  subsidisation  found  during  the  present  review,  as  the  injury  margin 
calculated in the original investigation remains higher. 

EN 

16 

   EN 

 
 
(71)  Since,  pursuant  to  Article  24(1)  of  the  basic  Regulation  and  Article  14(1)  of 
Regulation  (EC)  No  384/96,  no  product  shall  be  subject  to  both  anti-dumping  and 
countervailing  duties  for  the  purpose  of  dealing  with  one  and  the  same  situation 
arising from dumping or from export subsidisation, the countervailing duty found as a 
result of this review investigation to correspond to export subsidies (13,3 %) shall be 
deducted  from  the  anti-dumping  duty  imposed  on  Garware  by  Regulation  (EC)  No 
1676/2001. Following the amendment to the latter, introduced by Regulation (EC) No 
366/2006, a dumping margin of 20,1 % was established for Garware. Of that, 2,7 % 
was deducted to reflect the countervailing duty then in force corresponding to export 
subsidies and thus an anti-dumping duty of 17,4 % was imposed on that company. As 
a result of the current review, a further 10,6 % shall be deducted from its individual 
anti-dumping  duty,  reflecting  the  countervailing  duty  corresponding  to  export 
subsidies  found;  the  anti-dumping  duty  imposed  on  Garware  should  thus  be  reduced 
by that amount to 6,8 %. 

(72)  On the basis of the above, the proposed duty amounts concerning Garware, expressed 

on the CIF Community border price, customs duty unpaid, are as follows: 

Export 
Subsidy 
Margin 

% 

Garware 

13,3 

Total 
Subsidy 
Margin 

% 

14,9 

Dumping 
Margin 

CVD 
Duty 

AD Duty  Total Duty 

% 

20,1 

% 

14,9 

% 

6,8 

Rate 

% 

21,7 

(73)  Garware,  the  GOI  and  the  applicants  were  informed  of  the  essential  facts  and 
considerations on the basis of which it was intended to recommend the amendment of 
the  measures  in  force  and  had  the  opportunity  to  comment.  No  comments  were 
received  by  Garware  or  the  GOI;  the  applicant’s  comments  reflect  their  agreement 
with the conclusions reached by the Commission. 

(74)  The individual company countervailing and anti-dumping duty rates specified in this 
Regulation  were  established  on  the  basis  of  the  findings  of  the  investigations  which 
led  to  the  adoption  of  Regulation  (EC)  No  367/2006  and  Regulation  (EC)  No 
366/2006, as  well as of the findings of the present review. They reflect  the situation 
found during this review with respect to Garware. These duty rates (as opposed to the 
country-wide duty applicable to ‘all other companies’) are thus exclusively applicable 
to  imports  of  products  originating  in  the  country  concerned  and  produced  by  the 
companies  and  thus  by  the  specific  legal  entities  mentioned.  Imported  products 
produced 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’. 

(75)  Any claim requesting the application of these individual company countervailing and 
anti-dumping 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 

EN 

17 

   EN 

 
 
 
Commission9 forthwith with all relevant information, in particular any modification in 
the  company’s  activities  linked  to  production,  domestic  and  export  sales  associated 
with, for example, that name change or that change in the production and sales entities,  

HAS ADOPTED THIS REGULATION: 

Article 1 

In Article 1 of Council Regulation (EC) No 367/2006, paragraph 2 shall be replaced by the 
following: 

The  rate  of  the  duty  applicable  to  the  net  free-at-Community-frontier  price,  before 

‘2. 
duty for imports produced in India by the companies listed below, shall be as follows: 

Country 

Company 

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 

Definitive 
duty (%) 

TARIC  Additional 
Code 

12,0 

A026 

12,5 

A027 

14,9 

A028 

7,0 

A029 

7,0 

A030 

8,7 

A031 

9 

European Commission, Directorate General for Trade, Directorate B, J-79 5/17, Rue de la Loi/Wetstraat 
200, B-1049 Brussels.  

EN 

18 

   EN 

 
                                                 
India 

19,1 

A032 

Corporation 
Polyplex 
Limited,  B-37,  Sector-1, 
Noida  201  301,  Dist. 
Gautam  Budh  Nagar,  Uttar 
Pradesh, India 

India 

All other companies 

19,1 

A999’ 

Article 2 

In Article 1 of Council Regulation (EC) No 1676/2001, paragraph 2 shall be replaced by the 
following: 

The rate of the definitive anti-dumping duty applicable to the net, free-at-Community-

‘2. 
frontier price, before duty, shall be as follows for products originating in: 

Country 

Company 

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, 
50-A, 
Garware  House, 
Swami Nityanand Marg, Vile 
Parle  (East),  Mumbai  400 
057, India 

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

MTZ  Polyfilms  Limited, 
New India Centre, 5th Floor, 
Road, 
17 
Mumbai 400 039, India 

Co-operage 

Polyplex 
Corporation 
Limited,  B-37,  Sector-1, 
Noida 201 301, Dist. Gautam 
Budh  Nagar,  Uttar  Pradesh, 
India 

Definitive 
Duty (%) 

TARIC  Additional 
Code 

17,3 

A026 

0,0 

A027 

6,8 

A028 

0,0 

A030 

18,0 

A031 

0,0 

A032 

India 

All other companies 

17,3 

A999 

EN 

19 

   EN 

 
Korea 

Korea 

Korea 

Korea 

Korea 

Korea 

Kolon  Industries  Inc.,  Kolon 
1-23,  Byulyang-
Tower, 
dong, 
Kwacheon-city, 
Kyunggi-do, Korea 

SKC  Co.  Ltd,  Kyobo 
Gangnam  Tower,  1303-22, 
Seocho  4  Dong,  Seocho  Gu, 
Seoul 137-074, Korea 

Toray  Saehan  Inc.  17F,  LG 
Mapo  B/D,  275  Kongdug-
Dong,  Mapo-Gu,  Seoul  121-
721, Korea 

Industries  Co.  Ltd, 
HS 
Kangnam  Building  5th Floor, 
1321, Seocho-Dong, Seocho-
Ku, Seoul, Korea 

Hyosung  Corporation,  450, 
Kongduk-Dong,  Mapo-Ku, 
Seoul, Korea 

KP  Chemical  Corporation, 
No.  89-4,  Kyungun-Dong, 
Chongro-Ku, Seoul, Korea 

0,0 

A244 

7,5 

A224 

0,0 

A222 

7,5 

A226 

7,5 

A225 

7,5 

A223 

Korea 

All other companies 

13,4 

A999’ 

Article 3 

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

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

Done at Brussels, xx xxxxx 2006 

For the Council 
The President 
[…] 

EN 

20 

   EN