Council Regulation (EC) No 193/2007 of 22 February 2007 imposing a definitive countervailing duty on imports of polyethylene terephthalate (PET) originating in India following an expiry review pursuant to Article 18 of Regulation (EC) No 2026/97
Date: 2007-02-22
Institutions: Council of the European Union
Subjects: India, countervailing charge, import (EU), originating product, plastics

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COUNCIL REGULATION (EC) No 193/2007

of 22 February 2007

imposing a definitive countervailing duty on imports of polyethylene terephthalate (PET)
to Article 18 of Regulation
originating in India

following an expiry review pursuant

(EC) No 2026/97

THE COUNCIL OF THE EUROPEAN UNION,

Having regard to the Treaty
Community,

establishing the European

Having regard to Council Regulation (EC) No 2026/97 of 6
October 1997 on protection against subsidised imports from
countries not members of the European Community (1)
(the
basic Regulation), and in particular Article 18 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 Community (2), and in
particular, Article 14(1) thereof,

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

Whereas:

A. PROCEDURE

1. MEASURES IN FORCE

(1)

On 30 November 2000, by Regulation (EC) No
2603/2000 (3), the Council
imposed definitive counter-
vailing duties on imports of
certain polyethylene
terephthalate (PET) originating in India, Malaysia, and
Thailand (the countries concerned) (the original investi-
gation). The measures imposed had been based on a
countervailing measures investigation initiated pursuant
the same
to Article 10 of
time, by Regulation (EC) No 2604/2000 (4),
the
Council
anti-dumping duties on
imports of the same product originating in the same
countries. The measures imposed had been based on an
anti-dumping investigation initiated pursuant to Article 5
of Regulation (EC) No 384/96.

the basic Regulation. At

imposed definitive

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

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

(2) OJ L 56, 6.3.1996, p. 1. Regulation as last amended by Regulation

(EC) No 2117/2005 (OJ L 340, 23.12.2005, p. 17).

(3) OJ L 301, 30.11.2000, p. 1.
(4) OJ L 301, 30.11.2000, p. 21. Regulation as last amended by Regu-

lation (EC) No 1646/2005 (OJ L 266, 11.10.2005, p. 10).

(2)

(3)

(4)

(5)

(6)

(7)

(8)

to Regulation

amendments made

The
(EC) No
2604/2000 were the results of either review investi-
gations initiated pursuant to Article 11(3) and (4) of
Regulation (EC) No 384/96 or of price undertakings
being accepted under Article 8(1) thereof.

imposed definitive

Moreover, by Regulation (EC) No 1467/2004 (5),
the
Council
anti-dumping duties on
imports of certain PET originating in Australia and the
People's Republic of China (PRC) and terminated the
proceeding on imports of PET originating in Pakistan.

On 11 October 2005, the Council amended the level of
countervailing measures in force against imports of PET
from India (6). The amendments were a result of an accel-
erated review initiated pursuant to Article 20 of the basic
Regulation.

2. REQUEST FOR A REVIEW

Following the publication of a notice of
impending
expiry, the Commission, on 30 August 2005, received
a request to review the measures in force pursuant to
Article 18 of the basic Regulation (expiry review).

The request was lodged on 30 August 2005 by the
Plastics
Polyethylene
Terephthalate Committee
Europe (the applicant) on behalf of producers
rep-
resenting a major proportion,
in this case more than
90 %, of total Community production of PET.

of

for the expiry review was based on the
The request
the measures would be
grounds that
likely to result in a continuation or recurrence of subsi-
disation and injury to the Community industry.

the expiry of

after

determined,
that

consulting
sufficient evidence existed for

the Advisory
Having
Committee,
the
initiation of the review, pursuant to Article 18 of the
basic Regulation respectively, the Commission initiated
these reviews on 1 December 2005 (7).

(5) OJ L 271, 19.8.2004, p. 1.
(6) OJ L 266, 11.10.2005, p. 1.
(7) OJ C 304, 1.12.2005, p. 4.

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(9)

the basic Regulation,

It should be noted that prior to the initiation of the
expiry review, and in accordance with Articles 22(1)
the Commission
and 10(9) of
notified the Government of
it had
received a properly documented review request and
invited the GOI for consultations with the aim of clari-
fying the situation as
the
regards
complaint and arriving at a mutually agreed solution.
However, the Commission did not receive any answer
from the GOI regarding its offer for consultation.

the contents of

India (GOI)

that

3. PARALLEL INVESTIGATIONS

(14) After examination of the information submitted, given
the low number of exporting producers in India indi-
cating their willingness to cooperate,
it was decided
that sampling was not necessary as regards exporting
producers in India.

(15) Having

the

examined

information

by
Community producers and importers, and given the
relative small number of replies, it was considered that
sampling for none of
categories would be
warranted.

submitted

these

of

PET originating

(10) On 1 December 2005, the Commission also opened a
review pursuant to Article 11(2) of Regulation (EC) No
384/96 on the anti-dumping measures in force on
imports
Indonesia,
and
Malaysia,
Taiwan (8). A partial interim review pursuant to Article
11(3) of Regulation (EC) No 384/96 limited to dumping
was initiated at the same time concerning imports of the
same product originating in the Republic of Korea and
Taiwan (8).

the Republic

of Korea,

Thailand

India,

in

4. REVIEW INVESTIGATION PERIOD

(11)

The review investigation period (RIP) covered the period
from 1 October 2004 to 30 September 2005. The exam-
ination of trends in the context of injury covered the
period from 1 January 2002 up to the end of the RIP
(hereinafter referred to as the period considered).

5. PARTIES CONCERNED BY THE INVESTIGATION

(12)

(13)

the

advised

officially

The Commission
exporting
producers, the representatives of the exporting country,
importers, Community producers, users and the applicant
of the initiation of the expiry review. Interested parties
were given the opportunity to make their views known
in writing and to request a hearing within the time limit
set out in the notice of initiation. All interested parties
who so requested and showed that there were particular
reasons why they should be heard were granted a
hearing.

as well

as Community producers

In view of the apparent large number of Indian exporting
producers
and
importers listed in the request for the expiry reviews, it
was considered appropriate,
in accordance with Article
27 of the basic Regulation, to examine whether sampling
should be used. In order to enable the Commission to
decide whether sampling would be necessary and, if so,
to select a sample,
the above parties were requested,
pursuant to Article 27 of the basic Regulation, to make
themselves known within 15 days of the initiation of the
reviews and to provide the Commission with the infor-
mation requested in the notice of initiation.

(8) OJ C 304, 1.12.2005, p. 9.

(16) Questionnaires were
producers

therefore
the
in

exporting
importers, suppliers, Community producers and users.

sent
country

to all known
concerned,

(17)

(18)

Replies to the questionnaires were received from three
Indian producers, from 12 Community producers, from
one importer, one supplier and from 10 converters/users.

The Commission sought and verified all the information
it deemed necessary for its analysis and carried out veri-
fication visits at the premises of the following companies:

1. Community producers

Voridian BV (the Netherlands)

M & G Polimeri Italia Spa (Italy)

Equipolymers Srl (Italia)

La Seda de Barcelona SA (Spain)

Novapet SA (Spain)

Selenis Industria de Polímeros SA (Portugal)

Selenis Italia Spa (Italy)

Community Suppliers

Interquisa SA (Spain)

Unrelated importers in the Community

Global Service International SRL (Italy)

Community users

Coca Cola Enterprises Europe Ltd (Belgium)

2. Government of India

Ministry of Commerce, New Delhi

Government of Maharashtra — Directorate of
Industries, Mumbai

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3. Exporting producers in India

(d) Export Processing Zones

(EPZ)/Special Economic

Zones (SEZ)/Export Oriented Units (EOU)

SENPET Ltd, Kolkata
Limited)

(formerly Elque Polyesters

2. SUBSIDY SCHEMES NOT ORIGINALLY INVESTIGATED

Futura Polyesters Limited, Chennai
Polymer Limited)

(formerly Futura

Nationwide schemes

(e) Advance Licence Scheme (ALS)

Pearl Engineering Polymers Limited, New Delhi

(f) Export Credit Scheme

(pre-shipment

and post-

shipment) (ECS)

B. PRODUCT CONCERNED AND LIKE PRODUCT

1. PRODUCT CONCERNED

Regional schemes

(19)

The product concerned is the same as in the original
investigation,
i.e. PET with a viscosity number of
78 ml/g or higher, according to ISO Standard 1628-5,
originating in the country concerned. It is currently clas-
sifiable within CN code 3907 60 20.

(g) Gujarat Sales Tax Incentive Scheme (GSTIS)

(h) Gujarat Electricity Duty Exemption Scheme (GEDES)

2. LIKE PRODUCT

(i) West Bengal Incentive Schemes (WBIS)

(20) As in the original

investigation,

it was found that the
product concerned, PET produced and sold on the
domestic markets in the country concerned and PET
produced and sold by the Community producers have
the same basic physical and chemical characteristics
and uses. It is therefore concluded that all types of PET
with a viscosity of 78 ml/g or higher are alike within the
meaning of Article 1(5) of the basic Regulation.

(22)

C. LIKELIHOOD OF CONTINUATION OR RECURRENCE
OF SUBSIDISATION

I. CONTINUATION OF SUBSIDISATION — INTRODUCTION

(21) On the basis of the information contained in the review
to the Commission's ques-
schemes, which allegedly

request and the replies
tionnaire,
following
the
involve the granting of subsidies, were investigated.

1. SUBSIDY SCHEMES ORIGINALLY INVESTIGATED

Nationwide schemes

(a) Duty Entitlement Passbook Scheme (DEPBS)

(b) Income Tax Exemption Scheme (ITES)

(c) Export Promotion Capital Goods Scheme (EPCGS)

(j) Package

Scheme
Government of Maharashtra

of

Incentives

(PSI)

of

the

and

Import

documents,

Schemes (a) and (c) 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
1
Policy
September 2004 named Foreign Trade Policy, and are
issued by the Ministry of Commerce every five years
and updated regularly. One Export and Import Policy
i.e. the
document is relevant to the RIP of this case;
five-year plan relating to the period 1 September 2004
to 31 March 2009 (EXIM-policy 2004-2009).
In
addition,
the procedures
governing the EXIM-policy 2004-2009 in a Handbook
of Procedures — 1 September 2004 to 31 March 2009,
Volume I
(HOP I 2004-2009). The Handbook of
Procedure (HOP) is also updated on a regular basis.

also sets out

the GOI

since

(23)

Scheme (b) is based on the Income Tax Act of 1961,
which is amended yearly by the Finance Act.

(24)

is based on sections 21 and 35A of the
Scheme (f)
Banking Regulation Act 1949, which allows
the
Reserve Bank of India (RBI) to direct commercial banks
in the field of export credits.

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(25)

Scheme (g) is administered by the Government of Gujarat
and based on its industrial incentive policy; scheme (h) is
based on the Bombay Electricity Duty Act of 1958.

(26)

Scheme (j) is managed by the state of Maharashtra and is
based on resolutions of the Government of Maharashtra
Industries, Energy and Labour Department.

(27)

(28)

Scheme (i) is set up by the Government of West Bengal
through the Commerce and Industries Department noti-
fication No 588-CI/H of 22 June 1999 (WBIS 1999)
which was last replaced by notification No 134-CI/O/In-
centive/17/03/I of 24 March 2004 (WBIS 2004).

Following the disclosure of the findings concerning the
alleged subsidisation,
the GOI reiterates a number of
concerns regarding the countervailability of the schemes
and the calculation of
It also
reiterates arguments that there was no likely continuation
of subsidisation in the present case. To this end, it should
be noted that this submission does not contain any new
arguments which would alter the conclusions as set out
in this Regulation.

the subsidy amounts.

II. NATIONWIDE SCHEMES

1. DUTY ENTITLEMENT PASSBOOK SCHEME (‘DEPB’)

(a) Legal basis

(b) Eligibility

(33) Manufacturer-exporters, merchant-exporters

to’
supporting manufacturers and service providers are
eligible for this scheme.

‘tied

(c) Practical implementation

(34) 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 or zero rate of duty. To this
end the GOI issues upon application and payment of a
fee an EPCG license. In order to meet the export obli-
gation,
the imported capital goods must be used to
produce a certain amount of export goods during a
certain period.

(35)

The EPCGS licence holder can also source the capital
goods indigenously. In such case, the indigenous manu-
facturer of capital goods may avail of the benefit for
duty-free import of components required to manufacture
such capital goods. Alternatively, the indigenous manu-
facturer can claim the benefit of deemed export
in
respect
to the supply of capital goods to an EPCGS
licence holder.

(29)

The detailed description of the DEPBS is contained in
section 4.3 of EXIM-policy 2004-2009 and in section
4.3-4.4 of HOP I 2004-2009.

(36)

(30)

It was found that none of the cooperating exporting
producers obtained any countervailable benefits under
the (DEPBS).
It was therefore not found necessary to
further analyse this scheme in the scope of this investi-
gation.

2.

INCOME TAX SCHEMES

(31)

It was found that none of the cooperating exporting
producers obtained any countervailable benefits under
the ITES.
found necessary to
therefore not
further analyse this scheme in the scope of this investi-
gation.

It was

3. EXPORT PROMOTION CAPITAL GOODS SCHEME

(‘EPCGS’)

(a) Legal basis

(32)

The detailed description of the EPCGS is contained in
chapter 5 of EXIM-policy 2004-2009 and in Chapter 5
of HOP I 2004-2009.

(37)

(38)

(d) Conclusion on EPCG Scheme

The EPCGS provides subsidies within the meaning of
Articles 2(1)(a)(ii) and 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 otherwise due. In addition, the
duty reduction confers a benefit upon the exporter,
because the duties saved upon importation improve its
liquidity.

the EPCGS is contingent

in law upon
Furthermore,
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.

this

system or

scheme cannot be considered a
Consequently,
substitution
permissible duty drawback
system within the meaning of Article
drawback
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.

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(e) Calculation of the subsidy amount

in the

IP. One

goods of

such capital

(39) None of the cooperating exporters had purchased any
company continued
capital goods
however to benefit
from duty exemptions for capital
goods purchased before the IP at the amount established
subsidy amount
in the original
investigation. The
obtained during the RIP 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 actual de-
preciation period of
the
exporting producer. In accordance with the established
practice, the amount so calculated which is attributable
to the RIP has been adjusted by adding interest during
this period 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 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 during the
RIP as appropriate denominator, because the subsidy is
contingent upon export performance and it was not
granted by reference to the quantities manufactured,
produced,
subsidy
obtained for the company that continued to benefit
from the scheme was 0,38 %.

transported.

exported

The

or

4. EXPORT CREDIT SCHEME (ECS)

(a) Legal basis

(40)

The details of the scheme are set out in Master Circular
IECD No 5/04.02.01/2002-03 (Export Credit in Foreign
No
Master
Currency)
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.

Circular

IECD

and

(b) Eligibility

(41) Manufacturing exporters and merchant exporters are
eligible for this scheme. It was found that one of the
companies cooperating in the proceeding availed of
benefits under the ECS.

(c) Practical implementation

(42) Under this scheme, the RBI sets compulsory 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

to export, and the Post-
shipping of goods prior
Shipment Export Credit Scheme, which provides for
working capital
financing
export receivables. The RBI also directs the banks to
their net bank credit
provide a certain amount of
towards export finance.

loans with the purpose of

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

at preferential

interest

credits

(44)

(45)

(d) Conclusion on the ECS

Firstly, the preferential interest rates of an ECS credit set
by the RBI Master Circulars can decrease interest costs of
an exporter as compared with credit costs purely set by
market conditions and confer in this case a benefit
within the meaning of Article 2(2) of the basic Regu-
lation on such an exporter. Only in the case of those
rate
cooperating
differences were found to exist, it was concluded that a
benefit was conferred. The differences in rates between
the credits given further to the RBI Master Circulars and
commercial cash credit rates cannot be explained by pure
market behaviour of the commercial bank.

exporters, where

interest

such

inter alia,

Secondly, and 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 Regu-
lation. The RBI is a public body and falls therefore under
the definition of a government as set out in Article 1(3)
of the basic Regulation. It is 100 % government-owned,
pursues public policy objectives, e.g. monetary policy,
and its management is appointed by the GOI. The RBI
directs private bodies, since the commercial banks are
bound by the conditions,
the maximum
ceilings for interest rates on export credits mandated in
the RBI Master Circulars and the RBI provisions that
commercial banks have to provide a certain amount of
finance. This
their net bank credit
to carry out
direction obliges
functions mentioned in Article 2(1)(a)(i) of
the basic
Regulation, in this case loans in the form of preferential
export financing. Such direct transfer of funds in the
form of loans under certain conditions would normally
be vested in the government, and the practice, in no real
sense, differs
from practices normally followed by
governments, Article 2(1)(a)(iv) of the basic Regulation.
This subsidy is deemed to be specific and countervailable
since the preferential interest rates are only available in
relation to the financing of export transactions and are
therefore contingent upon export performance, pursuant
to Article 3(4)(a) of the basic Regulation.

commercial banks

towards export

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(46)

(e) Calculation of the subsidy amount

The subsidy amount has been calculated on the basis of
the difference between the interest paid for export credits
used during the RIP and the amount that would have
been payable if the same interest rates were applicable as
for ordinary commercial credits used by the particular
company. This subsidy amount
(numerator) has been
allocated over the total export turnover during the RIP
as 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 company that availed of
benefits under the ECS obtained a subsidy of 0,1 %.

5. EXPORT ORIENTED UNITS

SCHEME (EOUS)/SPECIAL

ECONOMIC ZONES SCHEME (SEZS)

(47)

It was found that none of the cooperating exporting
producers obtained countervailable benefits under the
SEZS. However, two Indian companies had the status
of an EOU and received countervailable subsidies in the
RIP. The description and assessment below is therefore
limited to the EOUS.

(a) Legal basis

(48)

The details of the EOU scheme are contained in Chapter
6 of EXIM-policy 2004-2009 and HOP I 2004-2009.

(b) Eligibility

(49) With the exception of pure trading companies, all enter-
prises which, in principle, undertake to export their entire
production of goods or services may be set up under the
EOUS. Undertakings in the industrial sectors have to
fulfil a minimum investment threshold in fixed assets
(10 million Indian rupees) to be eligible for the EOUS.

(c) Practical implementation

(50) As found in the original

investigation, EOUs can be

located and established anywhere in India.

(51) An application for EOU status must include details for a
inter alia, planned
exports,
value of
requirements.

period of
production quantities, projected
import

five years on,

requirements

indigenous

the next

and

Upon acceptance by the authorities of the company's
application, the terms and conditions attached to this
acceptance will be communicated to the company. The
agreement to be recognised as a company under EOU is
valid for a five-year period. The agreement may be
renewed for further periods.

(52) A crucial obligation of an EOU as set out in EXIM-policy
2004-2009 is to achieve net
foreign exchange (NFE)
earnings, i.e. in a reference period (five years) the total
value of exports has to be higher than the total value of
imported goods.

(53)

EOU units are entitled to the following concessions:

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

raw materials

required

capital

for

(ii) exemption from excise duty on goods procured

from indigenous sources;

(iii) reimbursement of central sales tax paid on goods

procured locally;

(iv) the facility to sell part of production on the
fob value of
domestic market of up to 50 % of
exports,
to fulfilment of positive NFE
earnings upon payment of concessional duties, i.e.
excise duties on finished products;

subject

(v) partial reimbursement of duty paid on fuel procured

from domestic oil companies;

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

(vii) possibility of 100 % foreign equity ownership.

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

(60)

(55)

They are legally obliged to maintain a proper account of
all
imports, of the consumption and utilisation of all
in
imported materials
accordance with 6.11.1 HOP 2004-2009. These
documents
to the
competent authorities
through quarterly and annual
progress reports.

should be submitted periodically,

exports made

and of

the

(56) However, ‘at no point in time shall an EOU be required
to co-relate every import consignment with its exports,
transfers to other units, sales in DTA or stocks’, as
section 6.11.2 of HOP I 2004-2009 states.

(57) 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.

(58)

(59)

cooperating

exporters. These

In the present case, the EOUS was used by two of the
exporters
cooperating
utilised the scheme to import raw materials and capital
goods free of import duties, to procure goods domes-
tically free of excise duty and to obtain sales tax reim-
bursement and to sell part of
its production on the
domestic market. One of the exporting companies also
utilised the scheme to obtain partial reimbursement of
duty paid on fuel procured from domestic oil companies.
They thereby availed of all benefits as described in recital
53(i) to (v). The investigation showed that the exporters
concerned did not avail of benefits under the income tax
exemption provisions of the EOUS.

(d) Conclusions on the EOUS

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

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

(61)

additional

the partial

Thus, only the exemption from basic customs duty,
special
reim-
customs duty,
bursement of duty paid on fuel procured from
domestic oil companies and the sales tax reimbursement,
constitute subsidies within the meaning of Article 2 of
the basic Regulation. They are contingent in law upon
export performance, and therefore deemed to be specific
and countervailable under Article 3(4)(a) of
the basic
Regulation. The export objective of an EOU as set out
in paragraph 6.1 of EXIM-policy 02-07 is a conditio sine
qua non to obtain the incentives.

(62) One of

the cooperating exporters asserted that

the
Commission has departed from the reasoning used in
the original investigation in terms of the assessment of
the duty exemption of raw materials and that only excess
in
remission if any should be countervailed. However,
reply to this it should be noted that at the time of the
original investigation, in the assessment of the counter-
vailable amount, the question on whether the EOU was a
permissible duty drawback system or not was made
‘without prejudice to the question of whether
the
scheme constitutes a drawback system in conformity
the provisions of the basic Regulation’ (9). Within the
framework of
the scheme as a whole,
along with the monitoring system was carefully invest-
igated.

review,

this

(63)

The investigation revealed that these subsidies 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 (items
(h) and (i)), Annex II (definition and rules for drawback)
and Annex III
(definition and rules for substitution
drawback) to the basic Regulation. In the circumstance
tax reimbursement and import duty
that
exemption provisions are used for purchasing capital
in conformity with the
goods,
rules
since capital
goods are not consumed in the production process, as
required by Annex I item (h) (sales tax reimbursement)
and (i) (import duties remission).

for permitted drawback systems

they are already not

the sales

(9) Recital 26, Regulation (EC) No 2603/2000 (OJ L 301, 30.11.2000,

p. 1).

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(64)

In addition, it has not been established that that the GOI
has a 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 II(II)(4) to
the basic Regulation and,
in the case of substitution
drawback schemes, Annex III(II)(2) to the basic Regu-
lation). The verification system in place aims at moni-
toring the Net foreign exchange earning obligation and
imports in relation to the
the consumption of
not
production of exported goods.

(67) Also, the GOI neither carried out a further examination
based on actual
inputs involved, although this would
normally be required in the absence of an effective veri-
fication system (Annex II(II)(5) and Annex III(II)(3) to the
basic Regulation). Furthermore, no evidence was provided
by the GOI demonstrating that no excess remission took
place.

the

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

supervision and control of

the

(68)

the above,

the company's claim that

In light of
the
Commission has departed from the reasoning used in
the original investigation in terms of the assessment of
the duty exemption of raw materials and that only excess
remission,
if any, should be countervailed has to be
rejected.

(e) Calculation of the subsidy amount

(69) Accordingly,

in the

a permitted duty
absence of
drawback system or substitution drawback system, the
countervailable benefit is the remission of total
import
duties (basic customs duty and special additional customs
duty) normally due upon importation as well as the
reimbursement of duty paid on fuel procured from
domestic oil companies and the sales tax reimbursement,
during the RIP.

(70)

(66)

Concerning further verification steps installed it should
be recalled, that an EOU is already de jure and at no
point
in time is required to co-relate every import
consignment with the corresponding resultant product.
Only if such controls were in place would the Indian
information
authorities be able to obtain sufficient
about the final destination of inputs so as to allow for
an efficient check that the duty/sales tax exemptions do
not exceed inputs for export production. Monthly tax
returns for domestic sales on a self-assessment basis,
which are periodically assessed by the Indian authorities,
do not suffice. In addition, the purpose of the monthly
tax returns is to monitor excise duties and not to control
the destination of
inputs. Company internal systems,
which are kept without legal obligation, would not as
such suffice since a duty drawback verification system
would need to be designed and enforced by
a
government and should not left to the discretion of the
management of each individual company concerned.
Consequently, the investigation has established that the
EOU is explicitly not required by the Indian EXIM policy
to record the nexus between input materials and the
finished product and no effective control mechanism
was set up by the GOI to determine which inputs were
consumed in export production and in what amounts.

(i) Exemption from import duties (basic customs
duty and special additional customs duty), sales
tax reimbursement on raw materials and reimbur-
sement of duty paid on fuel procured from
domestic oil companies

incurred

to obtain the

The subsidy amount for the exporters that are EOUs was
calculated on the basis of import duties forgone (basic
customs duty and special additional customs duty) on the
materials imported for the EOU as a whole, the sales tax
reimbursed, and the reimbursement of duties paid on
domestically purchased fuel all during the RIP. Fees
necessarily
subsidy were
deducted in accordance with Article 7(1)(a) of the basic
Regulation from this sum to arrive at the subsidy amount
In accordance with Article 7(2) of the
as numerator.
been
basic Regulation this
allocated
turnover
generated during the RIP as appropriate denominator,
because
export
performance and it was not granted by reference to the
quantities manufactured, produced, exported or trans-
ported. The subsidy margins thus obtained were 0,9 %
and 5,8 % respectively for the two companies.

subsidy
appropriate

contingent

amount

subsidy

export

upon

over

has

the

the

is

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(71)

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

to the

i.e. 18 years. The amount

Capital goods are not physically incorporated into the
finished goods. In accordance with Article 7(3) of the
investigated
basic Regulation,
the benefit
companies has been calculated on the basis of
the
amount of unpaid customs duty on imported capital
goods spread across a period which reflects the normal
depreciation period of such capital goods in the investi-
gated companies.
In order to determine such normal
depreciation period the actual depreciation periods used
by the two cooperating exporters concerned have been
so
used as a reference,
calculated is then attributable to the RIP and has been
adjusted by adding interest during this period in order to
reflect the value of the benefit over time and thereby
establish the full benefit of this scheme to the recipient.
In accordance with Article 7(2) and 7(3) of the basic
Regulation,
subsidy amount has been allocated
over the appropriate export turnover generated during
the RIP as
the
subsidy is contingent upon export performance and it
was not granted by reference to the quantities manu-
factured,
transported. The
exported
subsidy margins thus obtained for the two companies
were 1,8 % and 0,4 % respectively.

appropriate denominator, because

produced,

this

or

Eventually,

to
export.
manufacturer-exporters are eligible for deemed export
benefits under the sub-schemes Advance Release Order
(ARO) and back-to-back inland letter of credit.

intermediate

suppliers

(c) Practical implementation

(75) 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
export
product. The export must be ‘physical’ in the sense
that the export product has to leave Indian Territory.
The terms of the import allowance and export obli-
gation including the type of export product are
specified in the licence.

resultant

specific

a

(72)

Thus, the total subsidy margin under the EOUS for the
companies concerned amounts
to 2,7 % and 6,2 %
respectively.

6. ADVANCE LICENCE SCHEME (ALS)

(a) Legal basis

(73)

The detailed description of the scheme is contained in
sections 4.1 to 4.1.14 of EXIM-policy 2004-2009 and
Chapters 4.1 to 4.30 of HOP I 2004-2009.

(ii) Annual requirement: Such a licence is not linked to a
to a wider product
specific export product, but
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
It can
items falling under such a product group.
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.
The manufacturer-exporter produces the intermediate
product. It can import duty free input materials and
can obtain for this purpose an ALS for intermediate
the
supplies.
production and is obliged to export
the finished
product.

exporter

ultimate

finalises

The

(b) Eligibility

(74)

The ALS consists of six sub-schemes, as described in
more detail 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
requirement. Manufacturer–exporters
ALS
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 EXIM-policy 2004-2009, such as suppliers of an
export oriented unit (EOU), are eligible for ALS deemed

annual

(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-g) and (i-j) of EXIM
policy 2004-2009. The finished goods will, in other
words, not have to leave the country but are by
virtue of the status of the customer to be considered
deemed exports. This would include supply to an
EOU or
the Export
Promotion Capital Goods scheme.

to a licence holder under

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(v) ARO: The ALS holder intending to source the inputs
instead of direct import,
from indigenous sources,
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
in paragraph 8.3 of EXIM-policy 02-07 (i.e.
out
export,
supplies/deemed
ALS
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 draw-
back/refund of duties. The refund of taxes/duties is
available both for
inputs as well as
indigenous
imported inputs.

intermediate

for

(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
items being sourced in-
value and volume of
digenously instead of importation. The indigenous
supplier will be entitled to deemed export benefits
as set out in paragraph 8.3 of EXIM-policy 02-07
(i.e. ALS for intermediate supplies/deemed export,
terminal
deemed export drawback and refund of
excise duty).

(76)

(77)

It was established that during the RIP, one cooperating
exporter only obtained concessions under three sub-
schemes linked to the product concerned,
(i) ALS
physical exports, (v) ARO and (iv) ALS deemed export.
It is therefore not necessary to establish the countervail-
ability of
Intermediate
supplies, and (vi)
the back-to-back inland letter of
credit scheme.

requirement,

(ii) annual

(iii)

i.e.

in a

an actual

imported goods’

For verification purposes by the Indian authorities, a
licence holder is legally obliged to maintain ‘a true and
licence-wise consumption and util-
proper account of
isation of
specified format
(Chapter 4.30 and Appendix 23 HOP I 2004-2009),
(Appendix 23
consumption register
i.e.
register). As of May 2005 Appendix 23 must not only
it must also be
be preserved with the company but
to
countersigned by a chartered accountant and sent
the
the Indian authorities. The obligation to submit
Appendix 23 applies to licences issued after the entry
into force of the new rules in May 2005. The practical
implementation of this new system could therefore not
be verified as no report relating to these licences was due
at the time of the investigation.

(78)

In regard to the sub-schemes (i), (iv) and (v) listed 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
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 HOP II 2004-
2009.

(79)

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 six months each).

(80)

The advance licence holder
intending to source the
inputs from domestic sources, instead of direct imports
has the option to source them against Advance Release
Orders (ARO).
In such cases the advance licences are
validated as ARO's and are endorsed to the supplier
upon delivery of the items specified therein.

(81)

In the course of the review investigation, it was estab-
lished that the input materials imported according to the
SIONs import allowance duty free under the various sub-
schemes by the cooperating exporter exceeded the
material needed to produce the reference quantity of
the resultant export product. Thus, the SIONs for the
product concerned were not accurate.

(d) Conclusion

(82)

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.

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(83)

In addition, ALS ‘physical exports’ is 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.

(84) ALS ‘deemed export’ is de facto contingent upon export
performance.
It was only used by one company to a
minor extent and only when supplying EOUs or units
in a SEZ, both categories mentioned in paragraph 8.2(b)
its
of EXIM-policy 02-07. This company stated that
customers eventually exported the product concerned.
The objective of an EOU/SEZ is exportation as set out
in paragraph 6.1 of EXIM-policy 02-07. Thus, a domestic
supplier obtains benefits under the ALS deemed export,
because the GOI anticipates export earnings subsequently
received by an exporter
located in an EOU/SEZ.
According to Article 3(4)(a) of the basic Regulation, a
subsidy shall be considered as export contingent when
the granting of a subsidy,
the facts demonstrate that
though not legally contingent upon export performance,
is in fact tied to actual or anticipated export earnings.

(85)

sourced through the

In this case the cooperating company made no use of
advance licence for the purpose of importing duty free
Instead the company obtained a benefit by
imports.
sourcing raw materials from domestic suppliers through
the conversion of
the licences into ARO. Under this
scheme the right of exemption of taxes and duties falls
on the supplier instead of to the ultimate exporter in the
form of drawback/refund of duties. The exemption of
taxes/duties is available both for indigenous inputs as
well as
imported inputs. The investigation revealed
there was a significant difference in price between raw
indigenous unrelated
material
supplier by use of the ARO scheme as opposed to raw
materials sourced through an indigenous supplier when
no licence was used. The benefit of the exemption from
duties and taxes was passed on through lower prices
to the company using the raw
from the supplier
material
this proceeding. The
company could make a clear distinction between the
purchase prices of raw material under the use of the
licence and the price paid for the same raw material
when no licence was used. The company defined the
benefit thus obtained as the difference in price between
supplies sourced under the ARO and the price of supplies
sourced without such licence.

and concerned by

III

for

rules

(definition

substitution
and
Annex
drawback) to the basic Regulation. Although the GOI
mentioned that the system had undergone a change as
from May 2005,
it should be clear that these changes
had no impact on the schemes during the RIP, since the
new verification system was not yet fully implemented.
Notwithstanding the possible change of the verification
system by the GOI, the investigation revealed that during
the RIP the GOI did not effectively apply its verification
system. Nor did it apply procedures to confirm whether
and in what amounts inputs were consumed in the
production of the exported product (Annex II(II)(4) to
the basic Regulation and,
in the case of substitution
drawback schemes, Annex III(II)(2) thereto). The SIONs
for the product concerned were not sufficiently precise
and overestimated the raw material consumption. The
investigation revealed
being
that
amended in view of better reflecting the consumption
in place
of
during the RIP. Thus,
it is confirmed that the SIONs
themselves cannot be considered a verification system
of actual consumption, since these generous standard
norms do not enable the GOI to verify with sufficient
precision what amount of inputs were actually consumed
in the export production. Furthermore, an effective
control done by the GOI based on a correctly kept
(Appendix 23 register,
actual
formerly Appendix 18), did not
the
take place for
licences used in the RIP. In addition, the GOI did not
carry out a further examination based on actual inputs
involved, although this would normally need to be
carried out in the absence of an effectively applied veri-
fication system (Annex II(II)(5) and Annex III(II)(3) to the
basic Regulation), nor did it prove that no excess
remission took place.

these new SIONs were not

consumption register

inputs but

SIONs

the

are

(87)

These three sub-schemes are therefore countervailable.

(e) Calculation of the subsidy amount

(88)

In the absence of permitted duty drawback systems or
substitution drawback systems, the subsidy amount has
been established, as demonstrated by the company, on
the basis of the difference in price between the same raw
material purchased with and without the licence.

(86) None of the three sub-schemes used in the present case
can 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
(definition and rules for drawback) and
(i), Annex II

(89)

In accordance with Article 7(2) of the basic Regulation,
the subsidy amount has been allocated over the total
export turnover generated as appropriate denominator,
because
export
performance and was not granted by reference to the
quantities manufactured, produced, exported or trans-
ported.

contingent

subsidy

upon

the

is

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(90) One company benefited from this scheme during the RIP

and obtained subsidies of 20,9 %.

tigation revealed that the only sub-scheme used by one
of the cooperating exporting producers was the local
sales tax exemption.

(b) Eligibility

III. REGIONAL SCHEMES

(94)

1. GUJARAT SALES TAX INCENTIVE SCHEME (GSTIS) AND
GUJARAT ELECTRICITY DUTY EXEMPTION SCHEME
(GEDES)

(91)

It was found that none of the cooperating exporting
producers obtained any countervailable benefits under
the Gujarat Sales Tax Incentive Scheme (GSTIS) or the
Gujarat Electricity Duty Exemption Scheme (GEDES). It
was therefore not found necessary to further analyse this
scheme within the scope of this investigation.

a

large-scale

in expansion or diversification of

In order to be eligible, companies must as a rule invest in
less developed areas either by setting up a new industrial
capital
establishment or by making
investment
an
existing industrial establishment. These areas are classified
according to their economic development into different
categories (e.g.
lesser developed
less developed areas,
areas and least developed areas). 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.

(92)

2. WEST BENGAL INCENTIVE SCHEMES (WBIS)

the WBIS is set out

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

in
The detailed description of
Government of West Bengal
(GOWB) Commerce &
Industries Department notification No 588-CI/H of 22
June 1999 (WBIS 1999) which was last replaced by
24
notification No
March 2004 (WBIS 2004). The scheme conferred a
number of benefits on the recipient such as deferred
payment of sales tax, subsidy for installation of capital
goods, and development
subsidies. The investigation
established that one company had benefited from these
schemes in the past. However,
these
benefits during the RIP was negligible. For this reason
it was not
found necessary to further analyse these
schemes within the scope of this investigation.

the impact of

of

(c) Practical implementation

(95) Under

the local sales

tax exemption scheme which
expired in October 2004, designated units were not
required to collect any sales tax on their sales trans-
actions. Similarly, designated units were exempted from
the payment of the local sales tax on their purchases of
goods from a supplier itself eligible for the scheme.
Whereas the exemption in relation to sales transactions
does not confer any benefit on the designated sales unit,
the exemption in relation to purchase transactions,
however, does confer a benefit on the designated
purchasing unit. The investigation established that the
company concerned enjoyed sales tax exemption until
24 October 2006.

(d) Conclusion

(96)

(97)

3. PACKAGE

SCHEME OF

INCENTIVES

(PSI) OF THE

GOVERNMENT OF MAHARASHTRA (GOM)

(a) Legal basis

(93)

its

In order to encourage the dispersal of industries in the
Maharashtra 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. The scheme has been amended many times
since
introduction and the 2001 Scheme was
operative from 1 April 2001 until 31 March 2006
after which it was extended for one year until 31
March 2007. The PSI of
the GOM is composed of
several sub-schemes amongst which the main ones are:
(i) the refund of octroi tax /entry tax, (ii) the exemption
from electricity duty and (iii) the exemption from local
sales tax which expired on 24 October 2004. The inves-

financial

The PSI of
the GOM provides subsidies within the
the
meaning of Article 2(1)(a)(ii) and Article 2(2) of
basic Regulation. The sub-scheme examined constitutes
a
this
concession decreases the GOM's revenue which would
this exemption/refund
be otherwise due.
confers a benefit upon the company as it improves the
company's liquidity.

contribution by

In addition,

the GOM,

since

The sub-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 for companies located outside these areas.
The level of 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.

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(e) Calculation of the subsidy amount

IV. AMOUNT OF COUNTERVAILABLE SUBSIDIES

(98)

Concerning the sales tax exemption, the subsidy amount
was calculated on the basis of the amount of the sales tax
normally due during the RIP but which remained unpaid
under the scheme. Since the sales tax exemption scheme
expired on 24 October 2004, only the sales unpaid
during the period 1 to 24 October 2004 were taken
in the
into consideration because only this period fell
RIP. Pursuant to Article 7(2) of the basic Regulation,
the amount of
then been
allocated over the total company turnover during the
RIP as
the
the
contingent and it was not
subsidy is not export
granted by reference to the quantities manufactured,
produced, exported or transported. During the RIP one
company benefited from the sub-scheme; however the
subsidy amount obtained was
i.e.
negligible.

appropriate denominator, because

subsidy (numerator) has

than 0,1 %,

less

(99)

The amount of countervailable subsidies in accordance
with the provisions of the basic Regulation, expressed
ad valorem,
the investigated exporting producers
ranges between 2,7 % and 20,9 %.

for

(100) Although there was a high level of cooperation in terms
of proportion of exports to the Community it should be
noted that several exporting producers did not cooperate
in the proceedings,
including the exporting producer
with the highest subsidy margin in the original investi-
gation. The capacity and production of the non-coop-
erating producers in India is significant and it is also
likely that these exporting producers will continue to
avail of benefits under
the investigated subsidisation
schemes at least the same rate as that established in
the original investigation.

SCHEME

DEPBS

ITES

EPGS

EOU

ALS

ECS

GSTIS

GEDES WBIS

COMPANY

Senpet
(Former Elque)

Futura

Pearl

%

nil

nil

nil

%

nil

nil

nil

%

nil

nil

0,3

%

2,7

6,2

nil

%

nil

nil

20,6

%

nil

0,1

nil

%

nil

nil

nil

%

nil

nil

nil

%

nil

nil

nil

PSI

%

nil

nil

neg

Total

%

2,7

6,3

20,9

V. CONCLUSIONS

(101)

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.

(103) Since

it has been demonstrated that

subsidisation
continued at the time of the review and is likely to
likelihood of
continue in the future,
recurrence of subsidisation is irrelevant.

the issue of

In fact,

(102) As set out under recitals 21 to 100, it was established
the product
that during the RIP Indian exporters of
from countervailable
concerned continued to benefit
subsidisation by the Indian authorities.
the
subsidy margins found during the review are higher
than those established during the original investigation,
except for one exporting producer. The subsidy schemes
concerned give recurring benefits and there is no indi-
cation that these programmes will be phased out in the
foreseeable future. In the absence of information on how
the amendment to the ALS verification system will be
implemented in practice, no conclusions can be drawn as
these changes. Under these
to the possible effect of
in question
conditions,
will continue to receive countervailable subsidies. Each
subsidy
exporter
eligible
is
programmes. Under
it was
considered reasonable to conclude that
subsidisation
would be likely to continue in the future.

the
of
circumstances,

the exporters of

the product

for
these

several

D. DEFINITION OF THE COMMUNITY INDUSTRY

1. COMMUNITY PRODUCTION

(104) PET is manufactured in the Community by the following

companies:

Twelve producers which requested the expiry review,
supported them and cooperated in the investigation
(see recital 107).

Two producers which have requested the expiry review
but have not cooperated in the current investigation;

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One subsidiary of a Korean producer located in the
Community who has cooperated in the investigation
and has supported the request;

Novapet SA (Spain)

Selenis Industria de Polimeros SA (Portugal)

(105) PET produced by all these companies constitutes the total
Community production within the meaning of Article
9(1) of the basic Regulation.

Aussapol Spa (Italy)

Advansa Ltd (UK)

2. COMMUNITY INDUSTRY

(106) The Commission examined whether
requesting or

for

the expiry reviews

the cooperating
Community producers
supporting the
represented a major
request
proportion of the total Community production of PET.
Those Community producers accounted for 88 % of the
total Community production of PET. Those Community
producers who did not fully cooperate were excluded
from the definition of
the Community industry. The
Commission therefore considered that the 12 fully coop-
erating Community producers represent the Community
industry within the meaning of Articles 9(1) and 10(8) of
investigations the
the basic Regulation. In the original
Community industry represented more than 85 % of
the total PET production in the Community at that time.

(107) The following 12 Community producers constitute the

Community industry.

Wellman BV (the Netherlands)

Boryszew subsidiary Elana Wse (Poland)

V.P.I. SA (Greece)

SK Eurochem Sp.Z. o.o. (Poland)

E. SITUATION ON THE COMMUNITY MARKET

1. CONSUMPTION IN THE COMMUNITY MARKET

(108) Community consumption was established on the basis of
the Community industry, of
the sales volumes of
estimates of
the other Community
producers on the Community market based on data
provided at the complaint stage, and Eurostat data for
all Community imports from third countries.

sales of

the

Voridian BV (The Netherlands)

M & G Polimeri Italia Spa (Italy)

Equipolymers Srl (Italia)

La Seda de Barcelona SA (Spain)

(109) Between 2002 and the RIP, Community consumption of
the product concerned in the Community continuously
increased to reach a total of 2 400 000 tonnes in the
RIP. The overall increase over the period was 18 %. The
increase was partly due to new applications (beer and
inter alia) and partly due to the increase
wine bottles,
of consumption in the accession countries.

Table 1

2002

2003

2004

RIP

Community consumption (tonnes)

2 041 836

2 213 157

2 226 751

2 407 387

Index

100

108

109

118

2.

IMPORTS FROM INDIA

2.1. VOLUME, MARKET SHARE AND PRICES OF IMPORTS

(110) Between 2002 and the RIP, total imports from India increased by 13 %. Whereas imports decreased
by 17 % from 2002 to 2003, they increased by 100 percentage points in 2004 and decreased again
during the RIP to around 6 800 tonnes, i.e. by around 70 percentage points. Import prices rose by
five percentage points in 2003 and by further three and seven percentage points respectively in 2004
and during the RIP. This price trend only partially reflects the strong increase of the raw material
costs. Market share of Indian imports remained relatively small throughout the period considered, i.e.
0,3 % in 2002, 0,2 % in 2003, 0,5 % in 2004 and 0,3 % in the RIP.

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27.2.2007

India

Volume (tonnes)

Index

Price (EUR per tonne)

Index

Market share

Table 2

2002

2003

2004

RIP

6 046

4 999

11 079

100

883

100

83

930

105

183

955

108

0,3 %

0,2 %

0,5 %

6 831

113

1 018

115

0,3 %

3.

IMPORTS FROM OTHER COUNTRIES

(111) The volume of imports from other third countries increased by 25 percentage points during the
period considered. The biggest increase was observed in 2003, when imports rose by 41 percentage
points. After the imposition of anti-dumping measures on Chinese exports in 2004, imports declined
by 14 percentage points in 2004 and by two further percentage points in the RIP. Market shares
followed a similar trend passing from 15,9 % in 2002 to 20,6 % in 2003, to 18,5 % in 2004 and to
16,9 % during the RIP. The increase of the market share of imports was lower than the increase of
the imports in absolute terms, due to the stronger consumption. Import prices were on average
constantly lower than the EU prices between 2002 and 2004. Only during the RIP, were they slightly
above Community industry prices.

Volume (tonnes)

Index

Average price (EURpert)

Index

Market share

Main exporters

Korea

Pakistan

China

USA

Taiwan

Table 3

2002

2003

2004

RIP

324 749

456 499

411 020

406 562

100

869

100

141

821

94

127

907

104

125

1 061

122

15,9 %

20,6 %

18,5 %

16,9 %

113 685

129 188

139 296

127 734

28 558

47 875

20 570

42 136

83 208

131 343

16 105

36 986

55 125

49 678

49 763

16 796

73 426

72 814

50 393

29 382

F. ECONOMIC SITUATION OF THE COMMUNITY INDUSTRY

1. PRELIMINARY REMARKS

(112) At the beginning of the review, sampling of the Community producers was foreseen but considering
that their number was not excessive, it was decided to include all of them and the injury factors have
been assessed on the basis of information collected at the level of the entire Community industry.

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Official Journal of the European Union

L 59/49

(113) 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.

2. ANALYSIS OF ECONOMIC INDICATORS

2.1. PRODUCTION

(114) The Community industry's production increased by 20 % between 2002 and the RIP, i.e. from a level
of 1 465 000 tonnes in 2002 to 1 760 000 tonnes in the RIP. The yearly increase was 4,8 % in
2003 and 4,6 % in 2004. A further increase occurred in the RIP, when production soared by
150 000 tonnes,
i.e. by 10,8 %. This was due to the restructuring process undertaken by the
industry with the aim to better control the production costs and thereby take advantage of the
growing consumption in the Community market which, as stated, increased by 19 % between 2002
and the RIP (from 2 million tonnes in 2002 to 2,4 million tonnes in the RIP).

Table 4

2002

2003

2004

RIP

Production (tonnes)

1 464 522

1 534 480

1 602 086

1 760 828

Index

100

105

109

120

2.2. CAPACITY AND CAPACITY UTILISATION

(115) Production capacity increased by 22 % between 2002 and the RIP, i.e. from a level of 1 760 000
tonnes in 2002 to 2 156 000 tonnes in the IP. The increase occurred mainly in the RIP, when
production capacity, compared to the year 2004, increased by 300 000 tonnes, i.e. 16,7 %. This
significant increase of production capacity was parallel to the increase of production over the same
period (see recital 114). The increase in production capacity resulted from additional investments in
production lines designed to take advantage of the growing market. The capacity utilisation increased
by four percentage points in 2003, remained on this level in 2004 and then decreased in the RIP by
five percentage points to the level of 82 %. The decrease between 2004 and the RIP results from the
significant increase of production capacity in that period. Consequently, a higher production volume
in the RIP, when compared with 2004, coincided with a lower capacity utilisation rate.

Table 5

2002

2003

2004

RIP

Production capacity (tonnes)

1 760 332

1 762 378

1 848 315

2 156 294

Index

Capacity utilisation

Index

100

83 %

100

100

87 %

105

105

87 %

104

122

82 %

98

2.3. SALES AND MARKET SHARE

(116) The volume sold by the Community industry on the Community market increased by 21 % between
2002 and the RIP. A growth of 2 % in 2003 was followed by an increase in both 2004 and RIP, by
eight and 11 percentage points respectively. Notwithstanding the increase of sales, due to the higher
consumption the Community industry's market share fell by four percentage points in 2003 and
then gradually rose by five percentage points in 2004 and one percentage point in the RIP.

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Table 6

2002

2003

2004

RIP

Sales in the EC (tonnes)

1 306 768

1 333 976

1 438 883

1 586 902

Index

Market share

2.4. GROWTH

100

64 %

102

60 %

110

65 %

121

66 %

(117) Overall, it has to be noted that the Community industry's market share increased by 2 % in the
period considered, which shows that its growth lagged behind the growth of consumption of the
overall market.

2.5. EMPLOYMENT

(118) The level of employment of the Community industry increased by 18 % in the period considered. The
main increase occurred in 2003 (11 percentage points) and 2004 (further six percentage points).
Although this rising tendency continued in the RIP, the increase amounted to only two percentage
points. This increase of 18 % during the whole period is linked to the production level which
increased by 20 %.

Table 7

2002

1 010

100

2003

1 124

111

2004

1 170

116

RIP

1 190

118

Employees

Index

2.6. PRODUCTIVITY

(119) The Community industry's productivity, measured as the output in tonnes per person employed per
year, increased overall over the period considered. After initially falling by 6 % in 2003 compared to
the year 2002 and remaining at this level in 2004, when productivity in the RIP increased signifi-
cantly by more than 8 % compared to 2004, a period when production increased significantly.

Table 8

2002

1 450

100

2003

1 365

94

2004

1 369

94

RIP

1 480

102

Productivity (tonnes/employee)

Index

2.7. WAGES

(120)

It has to be noted that PET chips production is a capital-intensive industry and that therefore labour
costs have a limited impact on the overall cost of the product. During the period, wages increased by
12 %, compared to a 20 % increase of the overall production cost. Another significant indicator is the
cost of wages spent per tonne produced. During the period, this cost decreased by 6 %.

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L 59/51

Wages (EUR million)

Index

Wages per tonne produced (in EUR)

Index

Table 9

2002

62,3

100

44,4

100

2003

63,0

101

42,9

96

2004

66,3

106

43,6

98

RIP

69,5

112

41,9

94

2.8. SALES PRICES AND FACTORS AFFECTING COMMUNITY PRICES

(121) The unit sales prices increased from EUR 924/tonne in 2002 to 1 058 EUR/tonne in the RIP. Overall,
the tendency was rising (by 15 % in the whole period). This increase is to a large extent a conse-
quence of the increase in the price of raw materials, which is due to the increase in the oil price.
Although the Community industry had increased prices it was not in the position to pass the increase
on to the downstream sector and fully reflect the increase of raw materials prices in its sales prices.
This was principally due to the fact that the increase in the price of raw materials was higher than the
increase of PET prices. With the aim to maintain its market share, the Community industry could
only moderately increase its prices and thus experienced price suppression.

Weighted average price (EUR/tonne)

Index

Table 10

2002

924

100

2003

902

98

2004

1 006

109

RIP

1 058

115

2.9. COST OF PRODUCTION OF THE MAIN RAW MATERIALS

(122) Bearing in mind that around 850 kg of purified terephthalic acid (PTA) and 350 kg of monoethylene
glycol (MEG) (the main raw materials) are needed to produce one tonne of PET, the costs of raw
materials (PTA and MEG) increased significantly respectively by 67 % and by 31 % between 2002 and
the RIP to reach the level of EUR 770/tonne (PTA) and EUR 721/tonne (MEG) (average of the RIP).
Although a small decline in prices of PTA has been noted in the third quarter of 2005 when the
prices dropped to the level of EUR 700/tonne, and a substantially stable price was observed for MEG,
it has to be pointed out that the raw materials are purchased in advance based on long-term
contracts. As a result, for the period considered, despite the small decline in prices of PTA at the
end of the RIP, the Community industry still bears the consequences of the heavily increased costs. In
addition, due to the situation on the world oil market the prices of raw materials for the production
of PET are susceptible to unpredictable changes but they are most likely to remain at a high level. All
these factors contribute to an increased level of vulnerability of the Community PET producers. It
should be noted, however, that the main raw materials are products traded on a global level, and
should therefore also affect the Indian exporting producers to the same extent.

— PTA

Index

— MEG

Index

Table 11

2002

460

100

551

100

average cost (EUR/tonne)

2003

566

123

550

100

2004

718

156

650

118

RIP

770

167

721

131

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Official Journal of the European Union

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(123) By comparison the average unit cost per tonne of PET chips produced by the Community industry

was the following:

Weighted average cost (EUR/tonne)

Index

Table 12

2002

899

100

2003

918

102

2004

1 013

113

RIP

1 092

121

(124) During the period considered, as indicated in Tables 11 and 12, the main raw materials have
continuously increased (PTA by 67 %, MEG by 31 %), while the overall cost of production raised
only by 21 %. However, as shown in Table 10, prices have only increased by 15 % due to the fact
that the Community industry was not in a position to pass the increase on to the downstream sector
and fully reflect the rise of raw materials prices in its sales prices.

2.10. STOCKS

(125) The evolution of stocks over the whole period considered, i.e. between 2002 and the RIP, is down by
10 %. However, as in the original investigations, stocks should not be considered as a meaningful
indicator as regards PET produced by the Community industry, given the seasonal nature of the PET
market throughout the year. When compared to the production, stocks represent around 5 or 6 % of
the output.

Stocks (tonnes)

Index

Table 13

2002

2003

2004

RIP

101 554

110 695

90 422

91 123

100

109

89

90

2.11. PROFITABILITY, RETURN ON INVESTMENTS AND CASH FLOW

(126) Profitability on sales represents the profit generated by sales of the product concerned in the
Community. Return on total assets and cash flow could only be measured at the level of the
narrowest group of products which included the like product, pursuant to Article 8(8) of the
basic Regulation. Moreover, return on investments has been calculated on the basis of return on
total assets, as return on total assets is considered more relevant for the analysis of the trend.

Table 14

2002

Pre-tax profit margin on sales
Community

in the

2,7 %

Return on total assets

Cash flow (% of total sales)

2,0 %

18,1 %

2003

– 1,8 %

– 1,4 %

5,5 %

2004

– 0,7 %

– 0,6 %

10,1 %

RIP

– 3,2 %

– 2,4 %

– 2,6 %

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(127) Further to the price suppression starting in 2002 and coinciding with a strong increase of dumped
imports from the PRC, Taiwan, Malaysia, Korea and Australia (until 2004), and of subsidised imports
from India the financial situation of the Community industry deteriorated and turned into losses in
2003. After a small recovery in 2004 due to the anti-dumping measures imposed on PRC and
Australia, losses increased to – 3,2 % in the RIP. It is therefore noted that there is a clear downward
trend.

(128) The trends for return on total assets and for cash flow developed similarly i.e. showed a relatively
good situation in 2002, a sharp deterioration in 2003, a small recovery in 2004 and a further
deterioration in the RIP.

2.12.

INVESTMENTS AND ABILITY TO RAISE CAPITAL

Table 15

Investments (EUR '000)

31 779

42 302

63 986

50 397

Index

100

133

201

159

2002

2003

2004

RIP

to the

improvement of

(129) The investments were partly dedicated to an increase of
the
capacity
and partly
production process. The bulk of
the expenditure was
made in 2004 and during the RIP, coinciding with the
increase of the capacity and with the aim to keep the
the increased consumption.
market share in view of
Nevertheless,
the Community
industry and the evolution of
the Community and
world markets for PET marked out by lack of profit-
ability were not
excessive
an incentive
circumstances
investments.
Community producers have been able to raise capital
(in particular from related companies), the lack of profit-
ability of PET did not encourage investment and in some
cases the decision was postponed.

the current situation of

to make

Although

some

in

2.13. MAGNITUDE OF THE ACTUAL MARGIN OF SUBSIDY

this

impact

(130) As concerns the impact on the Community industry of
the magnitude of the actual margin of subsidy of Indian
imports, given the price sensitivity of the market for this
considered to be
product,
this indicator
negligible.
is
the likelihood of
more relevant
in the context of
recurrence of injury analysis. Should measures lapse,
it
is likely that subsidised imports would come back at such
volumes and prices that the impact of the magnitude of
the subsidy margin would be significant.

It should be noted that

cannot be

2.14. RECOVERY FROM THE EFFECTS OF PAST

SUBSIDISATION

(131) While

the

indicators

examined above

improvement

in some

economic

show some
the

indicators of

Community industry, further to the imposition of defi-
nitive countervailing measures in 2001, they also provide
evidence that the Community industry is still fragile and
vulnerable.

3. CONCLUSION ON THE SITUATION OF THE COMMUNITY

INDUSTRY

(132) The constant increase of consumption partly due to new
applications (inter alia beer and wine bottles) and partly
due to the increase of consumption in the accession
countries, obliged the Community industry to increase
capacity and production in order not to lose market
share. To do so, an important
restructuring process
accompanied by a frequent change of the ownership of
the different producers, took place in 2004 and during
the RIP. In parallel, the number of production lines was
generally increased in order to follow the increase of the
consumption and to concurrently achieve economies of
scale. Thus, some economic indicators, i.e. consumption,
and
capacity
employment
In
the sales price also increased during the
addition,
period considered. However,
restructuring
all
efforts described above could not counterbalance the
impact of
the constant and massive increase of raw
material prices in the period considered. The higher
raw material costs could not be passed on to the down-
stream sector to the extent it would have been necessary
to maintain a certain level of profitability. This caused a
serious deterioration of the profitability which decreased
from + 2,7 % in 2002 to – 3,2 % during the RIP. Similar
negative
return on
investments and for the cash flow.

indeed followed a positive

trends were observed for

production,

production,

EU sales

trend.

those

the

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Official Journal of the European Union

27.2.2007

(133) This coincided with the low price level of the imports
from the country concerned which clearly contributed to
the downward pressure on the price of the Community
industry. However, given the small volumes of subsidised
imports in the framework of this expiry review, the focus
is on the likelihood of recurrence of injury analysis. Thus,
despite the apparent positive developments concerning
financial
production, sales and sales price, the overall
situation of
is
and
deteriorated
the Community
reflected in the negative developments of profitability
(from 2,7 % profit in 2002 to 3,2 % losses in the RIP),
of export sales, production cost, return on investments
and cash flow.

(134)

(135)

(136)

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
one percentage point between 2002 and the RIP, whilst
it had earned five percentage points in the four years
preceding the adoption of the definitive countervailing
measures. On the other hand, the profitability of the
Community industry during the RIP is less negative
than before the imposition of definitive countervailing
measures. Consequently, despite some apparent positive
trends showed by the injury indicators, the situation of
the Community industry is still far from the levels that
could be expected had it fully recovered from the injury
found in the original investigations.

is

slightly

the situation of
improved,

therefore concluded that
industry

the
It
Community
as
has
compared to the period preceding the imposition of
and vulnerable.
measures, but
still very fragile
the
Furthermore,
country concerned did not
allow the Community
industry to fully reflect the increase in the price of raw
materials in its sales prices.

the price pressure from imports of

is

G. LIKELIHOOD OF RECURRENCE OF INJURY

RELATIONSHIP BETWEEN EXPORT VOLUMES AND PRICES
TO THIRD COUNTRIES AND EXPORT VOLUMES AND
PRICES TO THE COMMUNITY

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
sales.
Therefore,
should measures
lapse, Indian exporters would have an incentive to shift
significant quantities of
third
countries to the more attractive Community market, at

for over 95 % of
it was considered that,

from other

exports

export

total

price levels, which, even if they increased, were likely to
still be below the current price levels of export to the
Community.

PRODUCTION CAPACITY, UNUSED CAPACITY AND STOCKS

(137) As indicated further under recital 140,

the exporting
producers in India have the potential to increase their
export volumes to the Community market. India had a
significant growth in its production capacity from the
level of 330 000 tonnes in 2003 to 600 000 tonnes in
2005. According to market forecasts,
it is expected to
increase by a further 220 000 tonnes in 2008. In 2005,
the domestic sales amounted to 220 000 tonnes and
exports to 290 000 tonnes (including 6 831 tonnes to
the EU). On the basis of the data available, on average,
the current spare capacity should amount
to around
90 000 tonnes and has to be considered as significant
as it represents around 4 % of the current Community
consumption. This estimate is confirmed by the results of
the cooperating Indian producers, who had significant
spare capacities.

(138) Concerning the stock level, the investigation has shown
that the level of stocks held by the cooperating Indian
it should be
producers was not significant. However,
noted that
the level of stocks is not a meaningful
factor as the market for PET is cyclical.

(139) To conclude, although the imports to the EU were low,
there exists a risk that significant exports could be
diverted to the EU.

CONCLUSIONS

a

lower price

(140) The producers in the country concerned therefore have
the potential to raise and/or redirect their export volumes
to the Community market. The investigation showed that
the cooperating exporting producers sold the product
concerned at
than the Community
industry. 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 137, also in order to regain the level of market
shares held in the period before the imposition of
measures. Such price behaviour,
coupled with the
the exporters in the country concerned to
ability of
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.

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L 59/55

(141) As

shown above,

the Community
the situation of
industry remains vulnerable and fragile. It is likely that
if the Community industry were exposed to increased
volumes of
imports from the country concerned at
subsidised prices, this would result in a deterioration of
its sales, market shares, sales prices as well as the
consequent deterioration of
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.

the financial situation,

(142) On the basis of the foregoing it is concluded that the
likely be lower on the
import prices would most
in the absence of anti-subsidy
Community market
measures, as the producers in India would possibly try
to increase their market shares. Such price behaviour,
coupled with the ability of the exporting producers in
significant quantities of PET on the
India to sell
likelihood have the
Community market, would in all
the price pressure, with an
effect of
reinforcing
expected negative
the
Community industry.

impact on the

situation of

H. COMMUNITY INTEREST

1.

INTRODUCTION

(143) According to Article 31 of the basic Regulation, it was
examined whether the maintenance of the existing anti-
subsidy measures would be against the interest of the
the
Community as a whole. The determination of
Community interest was based on an appreciation of
all the various interests involved. The present investi-
gation analyses
situation in which anti-subsidy
measures have already been in place and allows for
impact on the
assessment of any undue negative
parties
anti-subsidy
measures.

concerned due

to the

current

a

(144) On this basis,

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

subsidisation,

injurious

of

2.

INTEREST OF THE COMMUNITY INDUSTRY

there

likelihood of
is a clear
(145) As outlined above,
recurrence of
injurious subsidisation if measures were
to be repealed. All the Community producers but two
fully cooperated and indicated their support
for the
ongoing measures.

the possibility for

(146) The continuation of anti-subsidy measures on imports
from India would enhance
the
Community industry to reach a reasonable level of profit-
ability because it is likely that in the short medium-term,
it would be able to increase sales quantities and thereby
benefit from economies of scale and at the same time is
likely to be able to moderately increase their sales price
and thereby reach a satisfactory profit
level. Even if
subsidised imports in the RIP originating in the India
were low and, therefore, could not have caused severe
injury,
the
situation of the Community industry if the anti-subsidy
measures were
thus
essential to guarantee the viability of the Community
industry's PET chips business, which has been facing
competition from subsidised imports from India for
several years.

they would be likely to negatively affect

repealed. These measures

are

3.

INTEREST OF IMPORTERS

(147) Low cooperation was obtained from the importers/
traders, and amongst those cooperating importers none
were purchasing from India. However, the cooperating
importers/traders could be regarded as representative as
their sales volume represented around 5 % of the EU
consumption. They would prefer a market with zero
enjoying good
also if
duties
financial results.

constantly

they are

(148) The investigation showed that there are still alternative
sources of supply with no anti-subsidy or anti-dumping
measures, i.e. from Mexico, Brazil, USA, Turkey, Pakistan,
Iran, Saudi Arabia, available. The importers/traders would
thus be able to rely on (or to switch to) considerable
alternative sources of supply.

(149) Bearing in mind that

the measures in force did not
considerably affect the importers,
it is concluded that
maintaining the existing countervailing measures against
imports originating in India would continue not have a
significant negative
the
effect on the
importers in the Community.

situation of

4.

INTEREST OF CONVERTERS/USERS

(150) The Commission sent questionnaires

to the

responses

to 47 known
converters/users. Only 10 converters/users with an
overall low representativity replied to the questionnaire.
According to the information on purchases supplied in
their
cooperating
converters/users during the IP represent about 20 % of
total Community consumption of PET. They purchased
during the IP 95 % of
their PET from Community
producers and the remainder from imports originating
in countries other
to this
review. A number of arguments against the imposition
of duties were presented.

than the country subject

questionnaire,

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Official Journal of the European Union

27.2.2007

(151) Five converters (transforming PET chips in preforms and
bottle grade and representing 10 % of the consumption)
replied to the questionnaire. The cost of PET chips
accounts
(mostly
their
they import
preforms).
negligible
third
countries. Nevertheless they oppose the continuation of
duties claiming that the measures could have the effect of
artificially raising the prices in Europe.

for 55 % of
It has been established that
quantities

final product

from India

and other

the last

(152) Five users accounting for about 10 % of the consumption
supplied rather incomplete data. The low level of coop-
eration from the big users is likely to be due to the fact
that
investigation concerning imports of PET
from the PRC, Australia and Pakistan took place only
two years ago. PET costs account for around 6 or 7 %
the overall cost and are therefore rather limited.
of
Although they have declared no imports from India,
similarly as the converters, they oppose the imposition
of duties claiming that the measures could have the effect
of artificially raising the prices in Europe.

(153) Considering the rather good financial situation of the
the
downstream industry,
Community industry, no converter/user put forward the
argument that maintaining the current duties could lead
to a loss of jobs or to moving manufacturing facilities
overseas.

to that of

in contrast

(154) Furthermore,

in terms of output,
size

the Community
increased
industry adapted its
consumption and therefore it
the
unused capacity of the Community industry could fully
cover the amount of the imports.

is very likely that

to match the

(155) Bearing in mind that there are still alternative sources of
supply with no anti-subsidy or anti-dumping measures,
Iran,
from Mexico, Brazil, USA, Turkey, Pakistan,
i.e.
Saudi Arabia, the Community users would moreover be
able to rely on (or to switch to) diversified suppliers of
the product concerned.

shown that

(156) As concerns the performance of the user industry, the
period
their
stable and rather
their profitability. Therefore it was
they were not negatively affected by the

investigation has
considered
turnover, maintained employment
improved overall
found that
anti-subsidy measures.

cooperating

increased

during

users

the

the

(157) On the basis of the above,

it is concluded that main-
taining the existing anti-subsidy measures against imports

originating in India would not have a significant negative
effect on the situation of the users in the Community.

5.

INTEREST OF SUPPLIERS

(158) The suppliers of

raw material

(monoethylene glycol
(MEG) and purified terephthalic acid (PTA), DMT and
IPA, all petrochemical products derivatives of naphtha,
for the measures and
clearly indicated their support
provided good cooperation. They would benefit
if
measures are maintained as the Community industry
would be likely to be able to recover allowing them to
improve their performance.

6. CONCLUSION ON COMMUNITY INTEREST

(159) Taking into account all of

is
concluded that there are no compelling reasons against
the current anti-subsidy measures
the maintenance of
against India.

the above factors,

it

I. COUNTERVAILING MEASURES

the reason that

(160) All interested 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. The Government of India
made comments on injury aspects alleging that it was
not demonstrated that the Community industry suffered
continued injury and that import pressure from India
was not
the European producers did
not fully reflect the increase of the raw materials cost
in their sale price. It is to be recalled that, as indicated in
the analysis of the situation of the Community industry,
its financial situation deteriorated and, as explained in
recital 127, the low price level of the imports from the
country concerned clearly contributed to the downward
the Community industry.
pressure on the price of
However,
subsidised
imports in the framework of this expiry review, the like-
lihood of recurrence of injury had to be examined. In this
regard it was concluded, as stated in recital 127, that in
absence of measures, increased volume of imports from
India at low prices would have a negative impact on the
situation of the Community industry. Furthermore, one
Indian exporter alleged that in the absence of measures it
is not
to the
likely that
emerging
Community. This
markets are more attractive than the Community, that
Indian demand is growing fast and that, therefore, no
spare capacity is available. It is however to be considered
that, notwithstanding an increase of the demand in the
Indian market,
company level
indicated spare capacities, as also confirmed by the
market intelligence. It is therefore concluded that none
of the disclosure comments received were such as to alter
the conclusions as contained in this regulation.

re-direct
claimed that

India will
exporter

investigation at

volumes of

given the

small

sales

the

27.2.2007

EN

Official Journal of the European Union

L 59/57

(161)

the basic Regulation,

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

the

(162) The

company

individual

countervailing duty

rates
specified in this Regulation reflect the situation found
during the review with respect
to the cooperating
exporters. Thus, they are solely applicable to imports of
the product concerned manufactured by these companies
and thus by the specific legal entities mentioned. Imports
of
the product concerned produced by any other
company not specifically mentioned in the operative
this Regulation with its name and address,
part of
including
specifically
to
from these rates and shall
mentioned, cannot benefit
‘other
be subject
companies’.

to the duty rate applicable to all

entities

related

those

(163) 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
Commission (10) forthwith with all relevant information,
in particular any modification in the company's activity
linked to production, domestic and export sales as-
sociated with, for instance, that name change or that
If appro-
change in the production and sales entities.
priate,
the Advisory
consultation
Committee, the Regulation will be amended accordingly
by updating the list of companies benefiting from indi-
vidual duty rates.

after

and

of

(164)

In order to ensure proper enforcement of the counter-
vailing 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
RIP. 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,

78 ml/g or higher, according to ISO Standard 1628-5, falling
within CN code 3907 60 20 and originating in India.

Except as provided for in Article 2,

2.
the
countervailing duty applicable to the net, free-at-Community
frontier price, before duty for products manufactured by the
companies listed below shall be as follows:

the rate of

Country

Company

India

India

India

India

India

India

Reliance Industries Limited

Pearl Engineering Polymers Ltd

Senpet Ltd

Futura Polyesters Ltd

South Asian Petrochem Ltd

All other companies

Counter-
vailing
duty (EUR/
tonne)

TARIC
additional
code

41,3

31,3

22,2

0

106,5

41,3

A181

A182

A183

A184

A585

A999

3.
In cases where goods have been damaged before entry
into free circulation and, therefore, the price actually paid or
payable is apportioned for the determination of the customs
to Article 145 of Commission Regulation
value pursuant
(EEC) No 2454/93 (11),
the amount of countervailing duty,
calculated on the basis of
the amounts set above, shall be
reduced by a percentage which corresponds to the apportioning
of the price actually paid or payable.

Notwithstanding paragraphs 1 and 2,

the definitive
4.
countervailing duty shall not apply to imports released for
free circulation in accordance with Article 2.

Unless otherwise

5.
concerning customs duties shall apply.

specified,

the provisions

in force

HAS ADOPTED THIS REGULATION:

Article 2

Article 1

1.
A definitive countervailing duty is hereby imposed on
imports of polyethylene terephthalate having a viscosity of

Imports shall be exempt from the countervailing duties
1.
imposed by Article 1 provided that they are produced and
directly exported (i.e.
to a company
acting as an importer in the Community by the companies
mentioned in paragraph 3, declared under the appropriate
TARIC additional code and that
in
paragraph 2 are met.

the conditions set out

invoiced and shipped)

(10) European Commission, Directorate-General for Trade, Directorate

(11) OJ L 253, 11.10.1993, p. 1. Regulation as last amended by Regu-

H, J-79 5/17, B-1049 Brussels.

lation (EC) No 1875/2006 (OJ L 360, 19.12.2006, p. 64).

L 59/58

EN

Official Journal of the European Union

27.2.2007

for

release for

free circulation is
2. When the request
presented, exemption from the duties shall be conditional
upon presentation to the customs service of
the Member
State concerned of a valid Undertaking Invoice issued by the
exporting companies mentioned in paragraph 3, containing the
essential elements listed in the Annex. Exemption from the duty
shall further be conditional on the goods declared and presented
to customs corresponding precisely to the description on the
Undertaking Invoice.

Country

Company

India

India

India

Pearl Engineering Polymers Ltd

Reliance Industries Ltd

South Asian Petrochem Ltd

TARIC
additional code

A182

A181

A585

Article 3

Imports accompanied by an Undertaking Invoice shall be

3.
declared under the following TARIC additional codes:

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

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

Done at Brussels, 22 February 2007.

For the Council
The President

F. MÜNTEFERING

27.2.2007

EN

Official Journal of the European Union

L 59/59

ANNEX

Elements to be indicated in the Undertaking Invoice referred to in Article 2(2):

1. The Undertaking Invoice number.

2. The TARIC additional code under which the goods on the invoice may be customs-cleared at Community borders (as

specified in the Regulation).

3. The exact description of the goods, including:

— the product reporting code number (PRC) (as established in the undertaking offered by the producing exporter in

question),
— CN code,
— quantity (to be given in units).

4. The description of the terms of the sale, including:

— price per unit,
— the applicable payment terms,
— the applicable delivery terms,
— total discounts and rebates.

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

6. The name of the official of the company that has issued the undertaking invoice and the following signed declaration:
‘I, the undersigned, certify that the sale for direct export to the European Community of the goods covered by this
invoice is being made within the scope and under the terms of the undertaking offered by … (company), and accepted
by the European Commission through Decision 2000/745/EC. I declare that the information provided in this invoice
is complete and correct.’