Commission Regulation (EC) No 1228/2007 of 19 October 2007 terminating the investigation concerning possible circumvention of countervailing measures imposed by Council Regulation (EC) No 1628/2004 on imports of certain graphite electrode systems originating in India
Date: 2007-10-19
Institutions: European Commission
Subjects: India, countervailing charge, electrical equipment, fraud against the EU, import, originating product

20.10.2007

EN

Official Journal of the European Union

L 277/15

COMMISSION REGULATION (EC) No 1228/2007

of 19 October 2007

terminating the investigation concerning possible circumvention of countervailing measures
imposed by Council Regulation (EC) No 1628/2004 on imports of certain graphite electrode
systems originating in India

THE COMMISSION OF THE EUROPEAN COMMUNITIES,

(4)

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 (the basic
Regulation) (1), and in particular Articles 14 and 23 thereof,

Whereas:

A. PROCEDURE

1. Existing measures and former investigations

(1)

(2)

(3)

and

parallel

anti-dumping

anti-subsidy
Following
imposed, by Regulation (EC)
proceedings, the Council
No 1628/2004 (2)
(the original Regulation), definitive
countervailing measures of 15,7 % for Graphite India
Limited, 7,0 % for HEG Limited and 15,7 % for all
other
certain graphite
companies on imports of
electrode systems originating in India.

2. Request

On 15 January 2007 the Commission received a request
the basic Regulation to
pursuant
to Article 23(2) of
the counter-
investigate the alleged circumvention of
vailing measures
certain
graphite electrode systems originating in India. The
request was submitted by the European Carbon and
Graphite Association (ECGA) on behalf of Community
producers of certain graphite electrode systems.

imposed on imports of

the

imposition of

The request contained prima facie evidence showing that
there had been a change in the pattern of trade following
countervailing measures on
the
imports of certain graphite electrode systems originating
in India, as shown by a significant increase in imports of
artificial graphite from India (the product under investi-
gation) while imports of certain graphite electrode
concerned) had
systems
decreased substantially during the same period.

(the product

from India

(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 295, 18.9.2004, p. 4.

The request to investigate the alleged circumvention of
the duties in force argued that one exporting producer of
the product concerned originating in India was, after
imposition of the duties, exporting the product under
investigation to its related company in the Community.
This
completion
operation in the Community to produce the product
concerned from the product under investigation.

then performing a

company was

(5)

(6)

(7)

(8)

It was alleged that there was insufficient due cause or
economic justification for these changes other than the
existence of the countervailing duties on certain graphite
electrode systems originating in India.

Finally, the applicant alleged that the remedial effects of
the existing countervailing measures on the product
concerned were being undermined in terms of quantity
and that the imported product still benefited from the
subsidy.

3. Initiation

The Commission initiated an investigation by Regulation
(EC) No 217/2007 (3) (the initiating Regulation) into the
to Articles 23(2)
alleged circumvention and, pursuant
and 24(5) of the basic anti-subsidy Regulation, directed
the customs authorities to register imports of the product
under investigation, being artificial graphite rods of a
diameter of 75 mm or more originating in India,
falling under CN code ex 3801 10 00 (TARIC code
3801 10 00 10), as from 2 March 2007.

4. Investigation

in India as well as

The Commission advised the authorities of India of the
initiation of the investigation. Questionnaires were sent
to
to the exporting producers
importers in the Community named in the request or
known to the Commission from the previous investi-
gation. Interested parties were given the opportunity to
make their views known in writing and to request a
hearing within the time limit set in the initiating Regu-
lation.

(9)

Two exporting producers in India submitted complete
replies
also
to the questionnaire. One
received from an importer in the Community.

reply was

(3) OJ L 62, 1.3.2007, p. 19.

L 277/16

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Official Journal of the European Union

20.10.2007

(10)

The Commission carried out
premises of the following companies:

investigations

at

the

2006. During the same period, imports under CN code
3801 10 00 increased from 1 348 tonnes in 2004 to
10 289 tonnes in 2006.

— Graphite India Limited, Durgapur and Bangalore,

India (GIL),

— Graphite COVA GmbH, Rothenbach, Germany

(COVA).

5. Investigation period

(11)

The investigation period was set as from 1 January 2006
to 31 December 2006.

(16) As stated in recital 3, the change in the pattern of trade
was alleged to stem from the substitution of imports of
finished graphite electrode systems by artificial graphite
rods produced in India.

(17) However, on inspection of

the related company in
Germany, Graphite COVA, it became clear that the part
of the imports from India declared as artificial graphite
were in fact imports of re-baked electrodes in the form of
rods of carbon which had not yet been through the
process of graphitisation. These
re-baked electrodes
were then graphitised and machined in Germany before
being resold.

(12)

(13)

(14)

B. RESULTS OF THE INVESTIGATION

1. General considerations/degree of cooperation

Two exporting producers of the product concerned and
the product under
investigation cooperated with the
investigation. The information submitted by the two
companies could be reconciled to the data available on
the imports of the product under investigation so as to
show that the two companies, Graphite India Limited
and HEG Limited, were the sole exporters of
the
product under investigation to the Community during
the IP.

(18)

(19)

2. Product concerned and like product

The product concerned by the possible circumvention is
graphite electrodes of a kind used for electric furnaces,
with an apparent density of 1,65 g/cm3 or more and an
electrical resistance of 6,0 μΩ.m or less, falling within CN
code ex 8545 11 00 (Taric code 8545 11 00 10) and
nipples used for such electrodes, falling within CN code
ex 8545 90 90 (Taric
code 8545 90 90 10) whether
imported together or separately originating in India (the
product concerned).

The product under investigation is artificial graphite rods
of a diameter of 75 mm or more originating in India,
normally declared under CN code ex 3801 10 00 (TARIC
3801 10 00 10)
(the product under investigation). The
product under investigation is an intermediate product
in the manufacturing of the product concerned, and it
already embodies the basic characteristics of the latter
product.

3. Change in the pattern of trade

(15) According to Eurostat data,

imports under CN codes
8545 11 00 and 8545 90 90 from India decreased
in
from 11 866 tonnes

in 2004 to 3 244 tonnes

trade described by the
The change in the pattern of
insofar as
applicant is confirmed by the available data,
the
and
8545 90 90 appeared to be partly replaced by an
increase in imports under CN code 3801 10 00.

under CN codes

8545 11 00

imports

The latter increase consisted essentially of
imports of
carbon rods destined for the manufacture of electrodes
with a diameter of 600 mm or above, and artificial
graphite rods for the manufacture of electrode nipples,
imported by COVA from GIL,
its parent company in
India.

(20)

Regarding HEG, it was found that no such change in the
pattern of trade had taken place.

4. Insufficient due cause or economic justification

(21)

The Commissions services examined whether, as alleged,
the acquisition of COVA by GIL in 2004, and the
subsequent changes in the pattern of trade, could be
considered as having an economic justification other
than the duty imposed in 2004.

(22)

In particular, the following aspects were examined:

— the nature of the manufacturing activities undertaken
by COVA before and after the acquisition by GIL,

— the amount of the investment by GIL in COVA, and
in electrodes and

the overall volume of business,
other products,

20.10.2007

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Official Journal of the European Union

L 277/17

— COVAs technical and historical constraints regarding
large diameter electrodes and

the production of
nipples,

— COVAs capacity constraints in the various stages of

production,

— differences in costs such as labour, energy and manu-
stages of
at

facturing overheads,
production, between COVA and GIL, and,

various

the

— technical and marketing advantages of having the
in
electrode

finished

electrodes
Germany as opposed to in India.

nipples

and

(23)

Following examination of
German and Indian producers, it was found that:

these points

in both the

— a number of

in terms of capacity and
reasons,
that COVA
technical constraints, explain the fact
has not so far
taken up the full production of
nipples and large diameter electrodes. In particular,
COVA has historically not produced the largest
diameter electrodes, which used to be outsourced
from other producers. Also, electrode nipples used
to be produced in a plant which no longer belongs
to the group. It is logical therefore that COVA should
now procure
from its parent
company GIL,

those materials

(24)

(25)

(26)

it was concluded that there were reasonable
Therefore,
economic grounds, other than the imposition of duties
on imports of certain graphite electrode systems origi-
nating in India, for the change in the pattern of trade
referred to in recital 3.

C. TERMINATION

the findings mentioned in recital 24,

In view of
it
appears appropriate that the current anti-circumvention
investigation be terminated. The registration of imports
of
in India
introduced by the initiating Regulation should therefore
be discontinued, and that Regulation should be repealed.

graphite originating

certain artificial

Interested parties were informed of the essential facts and
considerations on the basis of which the Commission
intended to terminate the investigation and were given
the opportunity to comment. The comments received
were not of a nature to change the above conclusions,

HAS ADOPTED THIS REGULATION:

Article 1

the possible

The investigation initiated by Regulation (EC) No 217/2007
countervailing
concerning
measures imposed on imports of certain graphite electrode
systems originating in India by imports of certain artificial
graphite originating in India is hereby terminated.

circumvention of

— the difference in the total cost of manufacturing
between Germany and India is not very significant,
and the small cost advantage of manufacturing the
entire product
in India is outweighed by other
advantages, such as having the products finished in
Germany and sold under the COVA label, and being
able to offer
sale
the entire product
dispatched from the site in Germany,

range for

— it was alleged that the purchase of COVA by GIL was
motivated solely by the imposition of the measures.
However the amount of investment by GIL in COVA
is of such a magnitude as to make it unlikely that the
potential duties payable on those imports could be
the main justification for such an investment.

Article 2

Customs authorities are hereby directed to discontinue the regis-
tration of imports established in accordance to Article 2 of
Regulation (EC) No 217/2007.

Article 3

Regulation (EC) No 217/2007 is hereby repealed.

Article 4

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, 19 October 2007.

For the Commission

Peter MANDELSON
Member of the Commission