Proposal for a Council Regulation amending Regulation (EC) No 367/2006 imposing a definitive countervailing duty on imports of polyethylene terephthalate (PET) film originating in India and amending Regulation (EC) No 1292/2007 imposing a definitive anti-dumping duty on imports of polyethylene terephthalate (PET) film originating in India
Date: 2008-12-11
Institutions: European Commission
Subjects: India, countervailing charge, import, originating product, plastics

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COMMISSION OF THE EUROPEAN COMMUNITIES 

Brussels, 11.12.2008 
COM(2008) 851 final 

Proposal for a 

COUNCIL REGULATION 

amending Regulation (EC) No 367/2006 imposing a definitive countervailing duty on 
imports of polyethylene terephthalate (PET) film originating in India and amending 
Regulation (EC) No 1292/2007 imposing a definitive anti-dumping duty on imports of 
polyethylene terephthalate (PET) film originating in India 

(presented by the Commission) 

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EXPLANATORY MEMORANDUM 

CONTEXT OF THE PROPOSAL 

Grounds for and objectives of the proposal 

This  proposal  concerns  the  application  of  Council  Regulation  (EC)  No  2026/97  of  6 
October 1997 on protection against subsidized imports from countries not members of 
the  European  Community  ('the  basic  Regulation')  in  the  anti-subsidy  proceeding 
concerning imports of polyethylene terephthalate (PET) film originating in India. 

General context 

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

Existing measures in the area of the proposal 

Council  Regulation  (EC)  No  367/2006  imposing  a  definitive  countervailing  duty  on 
imports of polyethylene terephthalate (PET) film originating in India. 

Council  Regulation  (EC)  No  1292/2007  imposing  a  definitive  anti-dumping  duty  on 
imports of polyethylene terephthalate (PET) film originating in India.  

Consistency with the other policies and objectives of the Union 

Not applicable. 

CONSULTATION OF INTERESTED PARTIES AND IMPACT ASSESSMENT 

Consultation of interested parties 

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

Collection and use of expertise 

There was no need for external expertise. 

Impact assessment 

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

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

LEGAL ELEMENTS OF THE PROPOSAL 

Summary of the proposed action 

On  12  October  2007,  the  Commission  initiated  on  its  own  initiative  a  partial  interim 
review  limited  to  the  level  of  subsidisation  of  the  countervailing  duty  in  force  in 
respect  of  imports  of  polyethylene  terephthalate  (PET)  film  originating  in  India.  The 
review was initiated because there was sufficient prima facie evidence available to the 
Commission that the circumstances with regard to subsidisation on the basis of which 

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measures  were  established  have  changed  and  that  these  changes  were  of  a  lasting 
nature. 

The  partial  interim  review  investigation  confirmed  that  (i)  the  level  of  subsidisation 
with  regard  to  the  concerned  co-operating  Indian  producers  has  decreased;  (ii)  the 
actual  modalities  of  the  investigated  schemes  and  their  countervailiability  have  not 
changed with respect to the previous investigation.  

Therefore, it is proposed that the Council adopts the attached proposal for a Regulation 
so  as  to  amend  the  duty  rates  applicable  to  the  concerned  co-operating  Indian 
producers. 

Legal basis 

Council  Regulation  (EC)  No  2026/97  of  6  October  1997  on  protection  against 
subsidized imports from countries not members of the European Community.  

Subsidiarity principle 

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

Proportionality principle 

The proposal complies with the proportionality principle because the form of action is 
described  in  the  above-mentioned  basic  Regulation  and  leaves  no  scope  for  national 
decision. 

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

Choice of instruments 

Proposed instruments: regulation. 

Other means would not be adequate because the above-mentioned basic Regulations do 
not foresee alternative options. 

BUDGETARY IMPLICATION 

The proposal has no implication for the Community budget. 

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.. 

Proposal for a 

COUNCIL REGULATION 

amending Regulation (EC) No 367/2006 imposing a definitive countervailing duty on 
imports of polyethylene terephthalate (PET) film originating in India and amending 
Regulation (EC) No 1292/2007 imposing a definitive anti-dumping duty on imports of 
polyethylene terephthalate (PET) film originating in India 

THE COUNCIL OF THE EUROPEAN UNION, 

Having regard to the Treaty establishing the European Community, 

Having  regard  to  Council  Regulation  (EC)  No  2026/97  of  6  October  1997  on  protection 
against  subsidized  imports  from  countries  not  members  of  the  European  Community1  (‘the 
basic Regulation’), and in particular Articles 19 and 24 thereof, 

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

Whereas: 

A. 

I. 

(1) 

(2) 

(3) 

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PROCEDURE 

Previous investigation and existing countervailing measures 
In  December  1999,  by  Regulation  (EC)  No  2597/19992,  the  Council  imposed  a 
definitive  countervailing  duty  on  imports  of  polyethylene  terephthalate  (PET)  film 
('the product concerned') falling within CN codes ex 3920 62 19 and ex 3920 62 90, 
originating in India. The investigation which led to the adoption of that Regulation is 
hereinafter referred to as the 'original investigation'. The measures took the form of an 
ad  valorem  countervailing  duty,  ranging  between  3,8  %  and  19,1  %  imposed  on 
imports  from  individually  named  exporters,  with  a  residual  duty  rate  of  19,1  % 
imposed  on  imports  of  the  product  concerned  from  all  other  companies.  The 
investigation period of the original investigation was 1 October 1997 to 30 September 
1998. 
In March 2006,  by Regulation (EC) No 367/20063, the Council, following an expiry 
review  pursuant  to  Article  18  of  the  basic  Regulation,  maintained  the  definitive 
countervailing  duty  imposed  by  Regulation  (EC)  No  2597/1999  on  imports  of  PET 
film  originating  in  India.  The  review  investigation  period  was  1  October  2003  to  30 
September 2004. 
In August 2006, by Regulation (EC) No 1288/20064, the Council, following an interim 
review  concerning  the  subsidisation  of  an  Indian  PET  film  producer,  Garware 

OJ L 288, 21.10.1997, p. 1. 
OJ L 316, 10.12.1999, p. 1. 
OJ L 68, 8.3.2006, p. 15. 
OJ L 236, 31.8.2006, p. 1. 

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(4) 

II. 

(5) 

(6) 

(7) 

(8) 

Polyester  Limited  ("Garware"),  amended  the  definitive  countervailing  duty  imposed 
on Garware by Regulation (EC) No 367/2006. 
In  September  2007,  by  Regulation  (EC)  No  1124/20075,  the  Council,  following  a 
partial  interim  review  concerning  the  subsidisation  of  another  Indian  PET  film 
producer, Jindal Poly Films, Limited, formerly known as Jindal Polyester Ltd, (Jindal), 
amended the definitive countervailing duty imposed on Jindal by Regulation (EC) No 
367/2006. 

Existing anti-dumping measures 
In August 2001, by Regulation (EC) No 1676/20016, the Council imposed a definitive 
anti-dumping  duty  on  imports  of  polyethylene  terephthalate  (PET)  film  originating, 
inter  alia,  in  India.  The  measures  consisted  of  an  ad  valorem  anti-dumping  duty 
ranging  between  0  %  and  62,6  %  imposed  on  imports  from  individually  named 
exporters, with a residual duty rate of 53,3 % on imports from all other companies. 
In March 2006, by Regulation (EC) No 366/20067, the Council amended the level of 
dumping  margins  calculated  by  Regulation  (EC)  No  1676/2001.  The  new  dumping 
margins range between 3,2 % and 29,3 % and the new dumping duty range between 0 
%  and  18%  taking  into  account  the  countervailing  duties  resulting  from  export 
subsidies imposed on the same products originating in India, as modified according to 
Council Regulation (EC) No 367/2006, which was adopted following an expiry review 
of Regulation (EC) No 2579/1999 referred to in recital (1) above. In August 2006, by 
Regulation (EC) No 1288/2006, the Council, following an interim review concerning 
the  subsidisation  of  an  Indian  PET  film  producer,  Garware  Polyester  Limited 
("Garware"),  amended  the  definitive  anti-dumping  duty  imposed  on  Garware  by 
Regulation (EC) No 1676/2001. 
In September 2006, by Regulation (EC) No 1424/20068, the Council, following a new 
exporting producer request amended Regulation (EC) No 1676/2001 in respect of SRF 
Limited. The Regulation established a dumping margin of 15,5 % and a dumping duty 
rate  of  3,5  %  for  the  company  concerned  taking  into  account  the  company's  export 
subsidy  margin  as  ascertained  in  the  anti-subsidy  investigation  which  led  to  the 
adoption  of Regulation  (EC)  No  367/2006 referred to above. Since  the company  did 
not have an individual countervailing duty, the rate established for all other companies 
was applied. 
The  Council,  by  Regulation  (EC)  No  1292/20079  imposed  a  definitive  anti-dumping 
duty  on  imports  of  polyethylene  terephthalate  (PET)  film  originating  in  India 
following an expiry review pursuant to Article 11(2) of Council Regulation (EC) No 
384/96 of 22 December 1995 on protection against dumped imports from countries not 
members  of  the  European  Community10  (‘the  basic  anti-dumping  Regulation’).  The 
same  Regulation  terminated  a  partial  interim  review  of  such  imports  limited  to  one 
India exporter pursuant to Article 11(3) of the basic anti-dumping Regulation. 

III. 

Initiation of a partial interim review 

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OJ L 255, 29.9.2007, p.1. 
OJ L 277, 23.8.2001, p.1. 
OJ L 68, 8.3.2006, p. 6. 
OJ L 270, 29.9.2006, p.1. 
OJ L 288, 6.11.2007, p. 1. 
OJ L 56, 6.3.1996, p. 1. 

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(9) 

Following the extension of the validity of the definitive countervailing duty in March 
2006, the Government of India ('GOI') made submissions that the circumstances with 
regard  to  two  subsidy  schemes  (the  Duty  Entitlement  Passbook  Scheme  and  the 
Income Tax Exemption under Section 80 HHC of the Income Tax Act) had changed 
and that these changes were of a lasting nature. Consequently, it was argued that the 
level  of  subsidisation  was  likely  to  have  decreased  and  thus  measures  that  had  been 
established partly on these schemes should be revised. 

(10)  The  Commission  examined  the  evidence  submitted  by  the  GOI  and  considered  it 
sufficient  to  justify  the  initiation  of  a  review  in  accordance  with  the  provisions  of 
Article 19 of the basic Regulation. After consultation of the Advisory Committee, the 
Commission initiated, by a Notice of Initiation published in the Official Journal of the 
European Union on 12 October 200711, an ex officio partial interim review limited to 
the level of subsidisation of the countervailing duty in force in respect of imports of 
polyethylene terephthalate (PET) film originating in India. 

(11)  The  purpose  of  the  partial  interim  review  investigation  is  to  assess  the  need  for  the 
continuation,  removal  or  amendment  of  the  existing  measures  in  respect  of  those 
companies  which  benefited  from  one  or  both  subsidy  schemes  that  had  allegedly 
changed, where sufficient evidence was provided in line with the relevant provisions 
of the Notice of Initiation. The partial interim review investigation would also assess 
the need, depending on the review findings, to revise the measures applicable to other 
companies  that  cooperated  in  the  investigation  that  set  the  level  of  the  existing 
measures and/or the residual measure applicable for all other companies. 

(12)  The  review  was  limited  to  the  level  of  subsidisation  of  the  companies  listed  in  the 
Annex  to  the  Notice  of  Initiation  as  well  as  to  other  exporters  that  were  invited  to 
make themselves known under the conditions and within the time limit set out in the 
Notice of Initiation. 

IV. 

Investigation period 

(13)  The investigation of the level of subsidisation covered the period from 1 October 2006 

to 30 September 2007 ('review investigation period' or 'RIP'). 

V. 

Parties concerned by the investigation 

(14)  The  Commission  officially  informed  the  GOI  and  those  Indian  exporting  producers 
who  co-operated  in  the  previous  investigation,  were  mentioned  under  Council 
Regulation (EC) 367/2006 and were listed in the Annex to the Notice of Initiation of 
the  partial  interim  review,  that  were  found  to  benefit  from  any  of  the  two  allegedly 
changed  subsidy  schemes,  as  well  as  Du  Pont  Tejin  Films,  Luxembourg,  Mitsubishi 
Polyester  Film,  Germany,  Toray  Plastics  Europe,  France  and  Nurell,  Italy,  which 
represent the overwhelming majority of Community PET film production (hereinafter 
"the Community industry"), of the initiation of the partial interim review investigation. 
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. 

(15)  All interested parties, who so requested and showed that there were particular reasons 

why they should be heard, were granted a hearing. 

(16)  The written and oral comments submitted by the parties were considered and, where 

appropriate, taken into account. 

11 

OJ C 240, 12.10.2007, p. 6. 

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(17) 

In view of the apparent number of parties involved in this review, the use of sampling 
techniques  for  the  investigation  of  subsidisation  was  envisaged  in  accordance  with 
Article  27  of  the  basic  Regulation.  In  order  to  enable  the  Commission  to  decide 
whether  sampling  would  be  necessary  and,  if  so,  to  select  a  sample,  exporting 
producers  were  requested,  pursuant  to  Article  27  of  the  basic  Regulation,  to  make 
themselves known within 15 days of the initiation of the partial interim review and to 
provide the Commission with the information requested in the Notice of Initiation. 

(18)  After  examination  of  the  information  submitted,  given  the  number  of  exporting 
producers  in  India  indicating  their  willingness  to  cooperate,  it  was  decided  that 
sampling was not necessary in this case. 

(19)  One company, SRF Limited, not listed in the Annex to the Notice of Initiation, made 
itself  known  and  provided  evidence  that  it  fulfilled  the  eligibility  provisions  of  the 
scope  of  the  partial  interim  review  investigation  as  those  set  out  in  point  (4)  of  the 
Notice  of  Initiation.  Consequently  this  company  was  included  in  this  review 
investigation. 

(20)  One  company,  Flex  Industries  Limited,  subject  to  a  countervailing  duty  (Council 
Regulation  (EC)  No  367/2006)  and  an  anti-dumping  duty  (Council  Regulation  (EC) 
No 1292/2007) has changed its name and is now known as Uflex Limited. This change 
of name does not affect the findings of previous investigations. 

(21) 

In order to obtain the information necessary for its investigation, the Commission sent 
questionnaires to the exporting producers which fulfilled the conditions set out in the 
Notice of Initiation. In addition, a questionnaire was sent to the GOI. 

(22)  Replies from  the  questionnaires were received from five Indian exporting producers, 

and from the GOI. 

(23)  The  Commission  sought  and  verified  all  information  it  deemed  necessary  for  the 
determination of subsidisation. Verification visits were carried out at the premises of 
GOI in Delhi, the Government of Maharashtra in Mumbai, the Reserve Bank of India 
in Mumbai, and the following companies:  

- Ester Industries Limited, New Delhi 
- Garware Polyester Limited, Mumbai 
- Polyplex Corporation Limited, Noida 
- SRF Limited, Gurgaon 
- Uflex Limited, Noida 

VI.  Disclosure and comments on procedure 

(24)  The  GOI  and  the  other  interested  parties  were  informed  of  the  essential  facts  and 
considerations  upon  which  it  was  intended  to  propose  to  amend  the  duty  rates 
applicable  to  the  concerned  co-operating  Indian  exporting  producers  and  prolong 
existing  measures  for  all  other  companies  which  did  not  co-operate  with  this  partial 
interim review. They were also given a reasonable time to comment. All submissions 
and comments were taken duly into consideration as set out below. 

B. PRODUCT CONCERNED 

(25)  The  product  covered  by  this  review  is  the  same  product  as  the  one  concerned  by 
Council Regulation (EC) No 367/2006, namely polyethylene terephthalate (PET) film 
falling within CN codes ex 3920 62 19 and ex 39 20 62 90 originating in India. 

C. SUBSIDISATION  

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1. 

INTRODUCTION 

Nationwide Schemes 

(26)  On  the  basis  of  the  information  submitted  by  the  GOI  and  the  co-operating  Indian 
exporting producers and the replies to the Commission’s questionnaire, the following 
schemes, which allegedly involve the granting of subsidies, were investigated:  

(a)  Advance  Authorization  Scheme  (formerly  known  as  Advance  Licence 

Scheme); 

(b)  Duty Entitlement Passbook Scheme; 

(c)  Export Promotion Capital Goods Scheme; 

(d)  Special Economic Zones/Export Processing Zones/Export Oriented Units; 

(e) 

Income Tax Exemption Scheme; 

(f)  Export Credit Scheme. 

Regional Schemes 

(g)  Package Scheme of Incentives (PSI) 

(27)  The schemes (a) to (d) specified above are based on the Foreign Trade (Development 
and Regulation) Act 1992 (No 22 of 1992) which entered into force on 7 August 1992 
('Foreign Trade Act'). The Foreign Trade Act authorises the GOI to issue notifications 
regarding the export and import policy. These are summarised in 'Export and Import 
Policy'  documents,  which  are  issued  by  the  Ministry  of  Commerce  every  five  years 
and updated regularly. One Export and Import Policy document is relevant to the RIP 
of this case, i.e. the five-year plan relating to the period 1 September 2004 to 31 March 
2009  ('EXIM-policy  04-09').  In  addition,  the  GOI  also  sets  out  the  procedures 
governing the EXIM-policy 04-09 in a 'Handbook of Procedures - 1 September 2004 
to  31  March  2009,  Volume  I'  ('HOP  I  04-09').  The  Handbook  of  Procedure  is  also 
updated on a regular basis. 

(28)  The Income Tax Scheme specified above under (e) is based on the Income Tax Act of 

1961, which is amended yearly by the Finance Act. 

(29)  The Export Credit Scheme specified above under (f) is based on sections 21 and 35A 
of the Banking Regulation Act 1949, which allow the Reserve Bank of India ('RBI') to 
direct commercial banks in the field of export credits. 

(30)  The scheme specified above under (g) is managed by State authorities in India. 

(31) 

In accordance with Article 11(10) of the basic Regulation, the Commission invited the 
GOI for additional consultations with respect to both changed and unchanged schemes 
with  the  aim  of  clarifying  the  factual  situation  as  regards  the  alleged  schemes  and 
arriving  at  a  mutually  agreed  solution.  Following  these  consultations,  and  in  the 
absence  of  a  mutually  agreed  solution  in  relation  to  these  schemes,  the  Commission 
included all these schemes in the investigation of subsidisation. 

General disclosure comments on subsidisation 

(32)  Following disclosure, the GOI and one exporting producer argued that it has not been 
determined  that  the  schemes  investigated  confer  a  benefit  to  the  recipient.  In 
addressing this  claim,  it should be noted that for each scheme under investigation, it 
was  established  whether  any  concession  is  a  subsidy  within  the  meaning  of  Article 
2(1)(a) and Article 2(2) of the basic Regulation, i.e. a financial contribution of the GOI 

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which conferred a benefit upon the investigated exporting producers. Moreover, it has 
the  various  schemes  are  considered 
been  explained  why  benefits  under 
countervailable.  In  addition,  all  co-operating  exporting  producers  have  received  a 
detailed  calculation  sheet  explaining  how  the  benefits  were  established  under  each 
scheme. Consequently, this claim has to be rejected. 

2. 

ADVANCE AUTHORISATION SCHEME ('AAS') 

(a)  Legal basis 

(33)  The detailed description of the scheme is contained in paragraphs 4.1.1 to 4.1.14 of the 
EXIM-policy  04-09  and  chapters  4.1  to  4.30  of  the  HOP  I  04-09.  This  scheme  was 
called  Advance  Licence  Scheme  during  the  previous  review  investigation  that  led  to 
the  imposition  by  Council  Regulation  (EC)  No  367/2006  of  the  definitive 
countervailing duty currently in force. 

(b)  Eligibility 

(34)  The  AAS  consists  of  six  sub-schemes,  as  described  in  more  detail  in  recital  (35). 
Those sub-schemes differ inter alia in the scope of eligibility. Manufacturer-exporters 
and  merchant-exporters  "tied  to"  supporting  manufacturers  are  eligible  for  the  AAS 
physical  exports  and  for  the  AAS  for  annual  requirement.  Manufacturer–exporters 
supplying  the  ultimate  exporter  are  eligible  for  AAS  for  intermediate  supplies.  Main 
contractors  which  supply  to  the  "deemed  export"  categories  mentioned  in  paragraph 
8.2 of the EXIM-policy 04-09, such as suppliers of an export oriented unit ('EOU'), are 
eligible for AAS deemed export. Eventually, intermediate suppliers to manufacturer-
exporters  are  eligible  for  "deemed  export"  benefits  under  the  sub-schemes  Advance 
Release Order ('ARO') and back to back inland letter of credit. 

(c)  Practical implementation 

(35)  Advance authorisations can be issued for: 

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

(ii)  Annual  requirement:  Such  an  authorisation  is  not  linked  to  a  specific  export 
product, but to a wider product group (e.g. chemical and allied products). The 
licence  holder  can  –  up  to  a  certain  value  threshold  set  by  its  past  export 
performance – import duty free any input to be used in manufacturing any of 
the  items  falling  under  such  a  product  group.  It  can  choose  to  export  any 
resulting  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 who produces the intermediate product can import 
duty  free  input  materials  and  can  obtain  for  this  purpose  an  AAS  for 
intermediate  supplies.  The  ultimate  exporter  finalises  the  production  and  is 
obliged to export the finished product.  

(iv)  Deemed  exports:  This  sub-scheme  allows  a  main  contractor  to  import  inputs 
free of duty which are required in manufacturing goods to be sold as “deemed 

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exports”  to  the  categories  of  customers  mentioned  in  paragraph  8.2.(b)  to 
(f),(g),(i)  and  (j)  of  the  EXIM  policy  04-09.  According  to  the  GOI,  deemed 
exports refer to those transactions in which the goods supplied do not leave the 
country.  A  number  of  categories  of  supply  is  regarded  as  deemed  exports 
provided the goods are manufactured in India, e.g. supply of goods to an EOU 
or to a company situated in a special economic zone ('SEZ').  

(v)  ARO: The AAS holder intending to source the inputs from indigenous sources, 
in lieu of direct import, has the option to source them against AROs. In such 
cases the Advance Authorisations are validated  as  AROs  and  are  endorsed  to 
the  indigenous  supplier  upon  delivery  of  the  items  specified  therein.  The 
endorsement  of  the  ARO  entitles  the  indigenous  supplier  to  the  benefits  of 
deemed exports as set out in paragraph 8.3 of the EXIM-policy 04-09 (i.e. AAS 
for intermediate supplies/deemed export, deemed export drawback and refund 
of terminal excise duty). The ARO mechanism refunds taxes and duties to the 
supplier instead of refunding the same to the ultimate exporter in the form of 
drawback/refund  of  duties.  The  refund  of  taxes/duties  is  available  both  for 
indigenous inputs as well as imported inputs.  

(vi)  Back to back inland letter of credit: This sub-scheme again covers indigenous 
supplies  to  an  Advance  Authorisation  holder.  The  holder  of  an  Advance 
Authorisation  can  approach  a  bank  for  opening  an  inland  letter  of  credit  in 
favour of an indigenous supplier. The authorisation will be invalidated by the 
bank for direct import only in respect of the value and volume of items being 
sourced  indigenously  instead  of  importation.  The  indigenous  supplier  will  be 
entitled  to  deemed  export  benefits  as  set  out  in  paragraph  8.3  of  the  EXIM-
policy  04-09  (i.e.  AAS  for  intermediate  supplies/deemed  export,  deemed 
export drawback and refund of terminal excise duty). 

(36)  Three  of  the  co-operating  exporting  producers  received  concessions  under  the  AAS 
linked to the product concerned during the RIP. Two of these companies made use two 
of  the  sub-schemes,  i.e.  (i)  AAS  physical  exports  and  (iii)  AAS  for  intermediate 
supplies.  The  third  company  used  sub-scheme  (ii)  AAS  for  annual  requirement.  It  is 
therefore not necessary to establish the countervailability of the remaining unused sub-
schemes. 

(37)  For verification purposes by the Indian authorities, an Advance Authorisation holder is 
legally obliged to maintain "a true and proper account of consumption and utilisation 
of  duty  free  imported/domestically  procured  goods"  in  a  specified  format  (chapters 
4.26,  4.30  and  Appendix  23  HOP  I  04-09),  i.e.  an  actual  consumption  register.  This 
register  has  to  be  verified  by  an  external  chartered  accountant/cost  and  works 
accountant  who  issues  a  certificate  stating  that  the  prescribed  registers  and  relevant 
records have been examined and the information furnished under Appendix 23 is true 
and  correct  in  all  respects.  Nevertheless,  the  aforesaid  provisions  apply  only  to 
Advance  Authorisations  issued  on  or  after  13  May  2005.  For  all  Advance 
Authorisations or Advance Licences issued before that date, holders are requested to 
follow the previously applicable verification provisions, i.e. to keep a true and proper 
account of licence-wise consumption and utilisation of imported goods in the specified 
format of Appendix 18 (chapter 4.30 and Appendix 18 HOP I 02-07). 

(38)  With  regard  to  the  sub-schemes  used  during  the  RIP  by  two  co-operating  exporting 
producers, i.e. physical exports and intermediate supplies, both the import allowance 
and  the  export  obligation  are  fixed  in  volume  and  value  by  the  GOI  and  are 

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documented on the Authorisation. In addition, at the time of import and of export, the 
corresponding  transactions  are  to  be  documented  by  Government  officials  on  the 
Authorisation.  The  volume  of  imports  allowed  under  the  AAS  is  determined  by  the 
GOI  on  the  basis  of  standard  input-output  norms  ('SIONs').  SIONs  exist  for  most 
products including the product concerned and are published in the HOP II 04-09. The 
most  recent  changes  in  the  SIONs  for  PET  film  and  PET  chips,  an  intermediate 
product, were revised in September 2005.  

(39)  With  regard  to  sub-scheme  (ii)  listed  above  (AAS  for  annual  requirement)  that  was 
used by the other exporter, only the import allowance in value is documented on the 
licence.  The  licence  holder  is  obliged  to  'maintain  the  nexus  between  inputs  and  the 
resultant product' (paragraph 4.24A(c) HOP I 04-09). 

(40) 

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 (24 months with two possible extensions of 6 
months each). 

(41)  The verification showed that the actual consumption rate for the companies concerned 
of key raw materials needed to produce one kilogram of PET film was lower than the 
corresponding SION. This was clearly the case with regard to the old SION for PET 
film, and to a lesser extent, to the revised SION which came into force in September 
2005. 

(42)  The verification further established that none of the companies concerned had kept the 
legally required consumption register referred to in recital (37) above. Consequently, it 
can  only  be  concluded  that  the  verification  requirements  stipulated  by  the  Indian 
authorities were not honoured. 

(d)  Conclusion 

(43)  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.  

(44) 

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

(45)  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 
rules laid down in Annex I item (i), Annex II (definition and rules for drawback) and 
Annex III (definition and rules for substitution drawback) of the basic Regulation. The 
GOI  did  not  effectively  apply  neither  its  new  nor  its  old  verification  system  or 
procedure  to  confirm  whether  and  in  what  amounts  inputs  were  consumed  in  the 
production of the exported product (Annex II(II)(4) of the basic Regulation and, in the 
case of substitution drawback schemes, Annex III(II)(2) of the basic Regulation). The 
SIONs for the product concerned were not sufficiently precise. The SION's themselves 
cannot be considered a verification system of actual consumption, because none of the 
companies  concerned  kept  the  required  consumption  register  to  enable  the  GOI  to 
verify with sufficient precision what amounts of inputs were consumed in the export 
production.  In  addition,  the  GOI  did  not  carry  out  a  further  examination  based  on 

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actual  inputs  involved,  although  this  would  normally  need  to  be  carried  out  in  the 
absence  of  an  effectively  applied  verification  system  (Annex  II(II)(5)  and  Annex 
III(II)(3) to the basic Regulation).  

(46)  These three sub-schemes are therefore countervailable. 

(e)  Calculation of the subsidy amount 

(47) 

In the absence of permitted duty drawback systems or substitution drawback systems, 
the countervailable benefit is the remission of total import duties normally due upon 
importation of inputs. In this respect, it is noted that the basic Regulation does not only 
provide for the countervailing of an "excess" remission of duties. According to Article 
2(1)(a)(ii) and Annex I(i) of the basic Regulation only when the conditions of Annexes 
II  and  III  of  the  basic  Regulation  are  met  that  the  excess  remission  of  duties  can  be 
countervailed. However, these conditions were not fulfilled in the present case. Thus, 
if  an  adequate  monitoring  process  is  not  demonstrated,  the  above  exception  for 
drawback  schemes  is  not  applicable  and  the  normal  rule  of  the  countervailing  of  the 
amount  of  unpaid  duties  (revenue  forgone),  applies,  rather  than  of  any  purported 
excess remission. As set out in Annexes II(II) and III(II) of the basic Regulation the 
burden is not upon the investigating authority to calculate such excess remission. To 
the contrary, according to Article 2(1)(a)(ii) of the basic Regulation, the investigating 
authority only has to establish sufficient evidence to refute the appropriateness of an 
alleged verification system. 

(48)  The subsidy amount for the three exporters which used the AAS was calculated on the 
basis  of  import  duties  forgone  (basic  customs  duty  and  special  additional  customs 
duty)  on  the  material  imported  under  the  three  sub-schemes  during  the  RIP 
(numerator).  In  accordance  with  Article  7(1)(a)  of  the  basic  Regulation,  fees 
necessarily  incurred  to  obtain  the  subsidy  were  deducted  from  the  subsidy  amount 
where  justified  claims  were  made.  In  accordance  with  Article  7(2)  of  the  basic 
Regulation, this subsidy amount was allocated over the export turnover during the RIP 
as  appropriate  denominator,  because  the  subsidy 
is  contingent  upon  export 
performance  and  was  not  granted  by  reference  to  the  quantities  manufactured, 
produced, exported or transported. 

(49)  Three co-operating exporting producers obtained benefits from this scheme during the 

RIP ranging from 0,5 % to 2,1 %. 

3. 

DUTY ENTITLEMENT PASSBOOK SCHEME (‘DEPBS’) 

(a)  Legal Basis 

(50)  The  detailed  description  of  the  DEPBS  is  contained  in  paragraph  4.3  of  the  EXIM-

policy 04-09 and in chapter 4 of the HOP I 04-09.  

(b)  Eligibility 

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

(c)  Practical implementation of the DEPBS 

(52)  An eligible exporter can apply for DEPBS credits which are calculated as a percentage 
of  the  value  of  products  exported  under  this  scheme.  Such  DEPBS  rates  have  been 
established  by  the  Indian  authorities  for  most  products,  including  the  product 
concerned.  They  are  determined  on  the  basis  of  SIONs,  taking  into  account  a 
presumed  import  content  of  inputs  in  the  export  product  and  the  customs  duty 

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incidence on such presumed imports, regardless of whether import duties have actually 
been paid or not.  

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

(54)  DEPBS  credits  are  freely  transferable  and  valid  for  a  period  of  12  months  from  the 
date of issue. They can be used for payment of customs duties on subsequent imports 
of any goods unrestrictedly importable, except capital goods. Goods imported against 
such  credits  can  be  sold  on  the  domestic  market  (subject  to  sales  tax)  or  used 
otherwise. 

(55)  Application  for  DEPBS  credits  are  electronically  filed  and  can  cover  an  unlimited 
amount  of  export  transactions.  De  facto  no  strict  deadlines  apply  to  DEPBS  credits. 
The  electronic  system  used  to  manage DEPBS is  not excluding  automatically export 
transactions  exceeding  the  deadline  submission  periods  mentioned  in  chapter  4.47 
HOP  I  04-09.  Furthermore,  as  clearly  provided  in  chapter  9.3  HOP  I  04-09 
applications  received  after  the  expiry  of  submission  deadlines  can  always  be 
considered with the imposition of a minor penalty fee (i.e. 10 % on the entitlement). 

(d)  Conclusions on the DEPBS 

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

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

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

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exporters which procure all of their inputs locally and do not import any goods which 
can be used as inputs are still entitled to benefit from the DEPBS.  

(e)  Calculation of the subsidy amount 

(59) 

In  accordance  with  Articles  2(2)  and  5  of  the  basic  Regulation  and  the  calculation 
methodology  used  for  this  scheme  in  Council  Regulation  (EC)  No  367/2006,  the 
amount  of  countervailable  subsidies  was  calculated  in  terms  of  the  benefit  conferred 
on the recipient found to exist during the RIP. In this regard, it was considered that the 
benefit is conferred on the recipient at the point in time when an export transaction is 
made  under  this  scheme.  At  this  moment,  the  GOI  is  liable  to  forego  the  customs 
duties,  which  constitutes  a  financial  contribution  within  the  meaning  of  Article 
2(1)(a)(ii)  of  the  basic  Regulation.  Once  the  customs  authorities  issue  an  export 
shipping  bill  which  shows,  inter  alia,  the  amount  of  DEPBS  credit  which  is  to  be 
granted for that export transaction, the GOI has no discretion as to whether or not to 
grant  the  subsidy.  Furthermore,  the  co-operating  exporting  producers  booked  the 
DEPBS credits on an accrual basis as income at the stage of the export transactions.  

(60)  Where justified claims were made, fees necessarily incurred to obtain the subsidy were 
deducted from the credits so established to arrive at the subsidy amount as numerator, 
pursuant to Article 7(1)(a) of the basic Regulation. In accordance with Article 7(2) of 
the basic Regulation this subsidy amount has been allocated over the export turnover 
concerned during the review investigation period as appropriate denominator, because 
the subsidy is contingent upon export performance and it was not granted by reference 
to the quantities manufactured, produced, exported or transported. 

(61)  Four co-operating exporting producers obtained benefits from this scheme during the 

RIP ranging from 2,7 % to 5,9 %. 

4. 

EXPORT PROMOTION CAPITAL GOODS SCHEME (‘EPCGS’)  

(a)  Legal basis 

(62)  The detailed description of the EPCGS is contained in chapter 5 of the EXIM-policy 

04-09 and in chapter 5 of the HOP I 04-09. 

(b)  Eligibility 

(63)  Manufacturer-exporters,  merchant-exporters  "tied  to"  supporting  manufacturers  and 

service providers are eligible for this scheme.  

(c)  Practical implementation 

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

(65)  The  EPCGS  licence  holder  can  also  source  the  capital  goods  indigenously.  In  such 
case,  the  indigenous  manufacturer  of  capital  goods  may  avail  of  the  benefit  for  duty 
free import of components required to manufacture such capital goods. Alternatively, 

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the  indigenous  manufacturer  can  claim  the  benefit  of  deemed  export  in  respect  of 
supply of capital goods to an EPCGS licence holder. 

(d)  Disclosure comments 

(66)  Following  disclosure,  one  exporting  producer  highlighted  that  the  capital  goods 
imported  under  this  scheme  were  also  used  for  the  production  of  products  not 
concerned with this investigation, and that, when determining the subsidy margin, the 
subsidy amount established and attributable to the RIP should be divided by exports of 
not  only  the  product  concerned.  This  claim  was  found  to  be  warranted  and  an 
appropriate adjustment was made in calculating the amount of benefit to this company 
under this scheme. 

(e)  Conclusion on EPCG Scheme 

(67)  The  EPCGS  provides  subsidies  within  the  meaning  of  Article  2(1)(a)(ii)  and  Article 
2(2) of the basic Regulation. The duty reduction constitutes a financial contribution by 
the  GOI,  since  this  concession  decreases  the  GOI’s  duty  revenue,  which  would  be 
otherwise  due.  In  addition,  the  duty  reduction  confers  a  benefit  upon  the  exporter, 
because the duties saved upon importation improve its liquidity. 

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

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

(f)  Calculation of the subsidy amount 

(70)  The  subsidy  amount  was  calculated,  in  accordance  with  Article  7(3)  of  the  basic 
Regulation, on the basis of the unpaid customs duty on imported capital goods spread 
across a period which reflects the normal depreciation period of such capital goods in 
the  industry  concerned.  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.  The 
commercial  interest  rate  during  the  review  investigation  period  in  India  was 
considered  appropriate  for  this  purpose.  Where  justified  claims  were  made,  fees 
necessarily  incurred  to  obtain  the  subsidy  were  deducted  in  accordance  with  Article 
7(1)(a) of the basic Regulation. 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, exported or transported. 

(71)  Four co-operating exporting producers obtained benefits from this scheme during the 

RIP ranging from 1,0 % to 1,9 %. 

5. 

(72) 

EXPORT  PROCESSING  ZONES  ('EPZS')  /SPECIAL  ECONOMIC  ZONES 
SCHEME (‘SEZS’)/ EXPORT ORIENTED UNITS SCHEME (‘EOUS’) 

It  was  found  that  none  of  the  cooperating  exporting  producers  had  the  status  of  an 
EOU  nor  were  any  of  them  located  in  an  EPZS.  However,  one  of  the  cooperating 

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exporting producers was located in an SEZS and received countervailable subsidies in 
the RIP. The description and assessment below is therefore limited to the SEZS. 

(a) Legal basis 

(73)  Chapter 7 of the EXIM-policy 04-09 and chapter 7 the HOP I 04-09 makes reference 
to  SEZS.  The  details  of  the  rules  and  provisions  are  no  longer  in  the  EXIM  policy 
book  and  the  Handbook  of  procedures.  The  relevant  policy  and  implementation 
provisions  are  the  Special  Economic  Zones  Act  of  2005  (No  28  of  2005)  and  the 
Special Economic Zones Rules of 2006 (Notification dated 10 February 2006). 

(b) Eligibility 

(74)  All enterprises which, in principle, undertake to export their entire production of goods 
or services may be set up under the SEZS. This also includes pure trading companies. 
Unlike  EOUS,  there  are  no  minimum  investment  thresholds  in  fixed  assets  which 
companies have to fulfil to be eligible for the SEZS. 

(c) Practical implementation 

(75)  The  SEZS  is  the  successor  scheme  of  the  former  Export  Processing  Zones  Scheme 
(EPZS). SEZS are specifically delineated duty-free enclaves and considered as foreign 
territory for the purpose of trade operations, duties and taxes. SEZS units have to be 
located  within  specified  zones  developed  for  that  purpose.  Seventeen  SEZS  are 
already  in  operation  following  the  approval  of  their  establishment  by  the  India 
authorities. 

(76)  An application for SEZ status must include details for the next five years of, inter alia, 
planned  production  quantities,  projected  value  of  exports,  import  requirements  and 
indigenous  requirements.  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  the  SEZS  is 
valid for a five-year period. The agreement may be renewed for further periods. 

(77)  A  crucial  obligation  for  SEZS  units  as  set  out  in  Chapter  VI  of  Special  Economic 
Zones  Rules  of  2006  is  to  achieve  Net  Foreign  Exchange  (‘NFE’)  earnings,  i.e.  in  a 
reference period (five years from the commencement of commercial production), the 
total value of exports has to be higher than the total value of imported goods. 

(78)  SEZS units are entitled to the following concessions: 

(i) 

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

(ii) 

exemption from excise duty on goods procured from indigenous sources; 

(iii)  exemption from central sales tax paid on goods procured locally; 

(iv) 

v) 

the  facility  to  sell  part  of  the  production  on  the  domestic  market,  subject  to 
fulfilment of positive NFE earnings upon payment of applicable duties as the 
SEZS are not considered part of the Indian fiscal/customs territory; 

100 % Income Tax Exemption on 'profits from exports' from SEZ units under 
Section 10AA of the Income Tax Act for the first 5 years, 50% for the next 5 
years thereafter and with the possibility for further benefits for the next 5 years; 
and  

(vi)  exemption from service tax for services consumed in an SEZ. 

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(79)  Units operating under SEZS are bonded under the surveillance of customs officials in 

accordance with the relevant provisions of the Customs Act.  

(80)  These units are legally obliged to maintain proper accounts which should indicate in 
value  terms  the  goods  imported  or  procured  from  the  domestic  tariff  area, 
consumption  and  utilisation  of  goods,  production  of  goods  and  disposal  of  goods  by 
way of exports, sales in the domestic tariff area etc. in accordance with rule 22(2) of 
the Special Economic Zones Rules of 2006. 

(81)  However,  at  no  point  in  time  is  a  SEZ  unit  required  to  co-relate  every  import 
consignment  with  its  exports  or  transfers  to  other  units,  or  with  its  sales  in  the 
domestic  tariff  area,  according  to  rule  35  of  the  Special  Economic  Zones  Rules  of 
2006.  

(82)  The  assessment  of  imports  and  domestic  procurement  of  raw  materials  and  capital 
goods is based on a self-certification basis. The same applies in case of export sales. 
Thus,  no  routine  examinations  of  such  consignments  of  an  SEZ  unit  by  customs 
authorities take place. 

(83) 

In the present case, the co-operating exporting producer utilised the scheme to import 
raw materials and capital goods free of import duties, to procure goods domestically 
free  of  excise  duty,  to  procure  goods  domestically  without  payment  of  central  sales 
tax, and to be exempted from service tax. The investigation showed that the exporting 
producer  concerned  did  not  avail  of  benefits  under  the  income  tax  exemption 
provisions of the SEZS. 

(d)  Disclosure Comments 

(84)  Following  disclosure,  the  exporting  producer  located  in  an  SEZS  made  a  number  of 
comments arguing e.g. that the sub-schemes used by the company are permissible duty 
exemption schemes (duty drawback) and that the sub-schemes used do not constitute a 
subsidy since they do not confer a benefit.  The arguments  of the exporting  producer 
are addressed below. 

(e) Conclusions on the SEZS  

(85) 

In the case of exemption from excise duty on goods procured from indigenous sources, 
it  was  found  that  the  duty  paid  on  purchases  by  a  non-SEZS  unit  can  be  used  as  a 
credit  for  its  own  future  duty  liabilities,  e.g.  towards  payment  of  excise  duty  on 
domestic sales (the so-called “CENVAT” mechanism). Therefore, the excise duty paid 
on  purchases  is  not  definitive.  By  the  means  of  “CENVAT”-credit,  only  an  added 
value bears a definitive duty, not the input materials. Thus, by granting an exemption 
from excise duty on purchases by an SEZS unit, no additional government revenue is 
forgone  and  consequently  no  additional  benefit  accrues  to  the  SEZS.  In  these 
circumstances,  as  no  additional  benefit  accrues  to  the  SEZS  it  is  not  necessary  to 
further analyse this sub-scheme in this investigation.  

(86)  The  exemption  of  a  SEZS  unit  from  two  types  of  import  duties  (basic  customs  duty 
and  special  additional  customs  duty  normally  due  on  imports  of  raw  materials  and 
capital  goods),  the  exemption  from  payment  of  sales  tax  on  goods  procured 
domestically  and  the  exemption  from  service  tax  constitute  subsidies  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 conferring a benefit upon 
the SEZS unit within the meaning of Article 2(2) of the basic Regulation, because it 
improves  its  liquidity.  The  subsidies  are  contingent  in  law  upon  export  performance 

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and, therefore, deemed to be specific and countervailable under Article 3(4)(a) of the 
basic  Regulation.  The  export  objective  of  SEZS  as  set  out  in  rule  2  of  the  Special 
Economic Zones Rules of 2006 is a conditio sine qua non to obtain the incentives. 

(87)  The exporting producer argued that the sub-schemes used by the company constitute 
permissible  duty  exemption  (duty  drawback)  schemes  pursuant  to  Article  2(1)(a)(ii) 
and  Annex  I  of  the  basic  Regulation  and  are  therefore  not  countervailable.  The 
company  submitted  that  Annex  (i)  to  the  basic  Regulation  provide  that  only  the 
exemption,  remission  or  drawback  of  import  charges  in  excess  of  those  levied  on 
imported  inputs  that  are  consumed  in  the  production  of  the  exported  product 
constitutes an export subsidy. In other words, as long as there is no excess remission 
or  exemption,  the  exemption  from  imported  duties  on  inputs  required  for  the 
manufacture, production or processing of the exported product cannot be considered as 
a countervailable subsidy. 

(88) 

In reply to this argument, it should first of all be noted that the benefits an SEZ unit 
enjoys  are  all contingent  in  law  upon  export performance. Furthermore, the schemes 
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)  of  the  basic  Regulation.  In  the  circumstance  that  the  sales  tax  exemption 
and import duty exemption provisions are used for purchasing capital goods, they are 
already not in conformity with the rules for permitted drawback systems since capital 
goods  are  not  consumed  in  the  production  process,  as  required  by  Annex  I  item  (h) 
(sales  tax  reimbursement)  and  by  Annex  I  item  (i)  (import  duty  remission).  In 
addition,  it  was  confirmed  that  the  GOI  has  no  effective  verification  system  or 
procedure in place to confirm whether and in what amounts duty and or the tax free 
procured  inputs  were  consumed  in  the  production  of  the  exported  product  (Annex 
II(II)(4)  of  the  basic  Regulation,  and,  in  the  case  of  substitution  drawback  schemes, 
Annex  III(II)(2)  of  the basic Regulation). In fact,  an SEZ unit is required to  achieve 
Net  Foreign  Exchange  (‘NFE’)  earnings,  but  there  is  no  verification  system  in  place 
aiming to monitor the consumption of imports in relation to the production of exported 
goods. 

(89)  As  an  alternative  argument,  the  exporting  producer  submitted  that  the  sub-schemes 
used by the company do not constitute subsidies as no benefit had been conferred upon 
the  company.  With  respect  to  domestic  sales,  the  exporting  producers  argued  that, 
since a SEZ unit is not considered to be part of the India fiscal/customs territory, full 
customs  duties  need  to  be  paid  on  the  finished  products  when  sold  to  the  domestic 
market. It was alleged that no benefit has been obtained since duties exempted on the 
inputs used in the production of goods sold on the domestic market are lower than the 
duties paid by the company when selling on the domestic market.  

(90) 

In addressing this claim, it should be noted that though the purpose for setting up as a 
SEZ unit is to achieve Net Foreign Exchange (‘NFE’) earnings, the SEZ unit has the 
possibility  to  sell  part  of  its  production  on  the  domestic  market.  Under  the  SEZ 
scheme,  the  goods  cleared  from  the  zone  to  the  domestic  market  will  be  treated  as 
imported goods. As such, an SEZ is not in a different situation than other companies 
operating on the domestic market, i.e. applicable duties/taxes would have to be paid on 
purchased goods. In this context, it should be clear that, a decision of the Government 
to  tax  goods  for  consumption  on  the  domestic  market,  does  not  mean,  that  the 

EN 

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(91) 

(92) 

exemption of a SEZS unit from import duties and sales taxes is not a benefit in relation 
to  the  export  sales  of  the  product  concerned.  Moreover,  the  sales  on  the  domestic 
market  have  no  impact  on  the  more  general  assessment  of  the  adequacy  of  whether 
there is an appropriate verification system in place. 

In  respect  of  export  sales,  the  exporting  producer  argued  that  the  exemption  from 
import duties and taxes does not constitute a countervailable subsidy as long as there is 
no  excess  remission.  The  company  further  argues  that  the  SEZ  unit  is  bonded  under 
surveillance  of  customs  officials,  and  that  it  is  not  possible  to  sell  inputs  on  the 
domestic market or to incorporate these inputs in products to be sold on the domestic 
market  without  paying  the  applicable  duties.  In  the  view  of  the  exporting  producer, 
there can be thus no excess remission. 

In reply to this, it should be recalled that there is no system or procedure in place to 
confirm which inputs are consumed in the production process of the exported product 
and  whether  an  excess  payment  of  import  duties  and  taxes  occurred  within  the 
meaning of Annexed I, II and II to the basic Regulation. A SEZ unit is already de jure 
and  at  no  point  in  time  required  to  co-relate  every  import  consignment  with  the 
destination of the corresponding resultant product. Only if such controls were in place 
would  the  Indian  authorities  be  able  to  obtain  sufficient  information  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.  Company  internal  systems 
would not as such suffice since a duty drawback verification system would need to be 
designed  and  enforced  by  a  government.  Consequently,  the  investigation  has 
established that the SEZ is explicitly not required by the legal rules and provisions for 
SEZS  to  record  nexus  between  imported  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. 

(93)  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 
verification  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. 

(f) Calculation of the subsidy amount 

(94)  Accordingly,  in  the  absence  of  a  permitted  duty  drawback  system  or  substitution 
drawback system, the countervailable benefit is the remission of customs duties (basic 
customs  duty  and  special  additional  customs  duty)  the  exemption  from  payment  of 
sales tax for goods procured domestically and the exemption from service tax, during 
the IP. 

(95)  As regards the exemption from payment of basic customs duties, the exemption from 
payment of sales tax for goods procured domestically and the exemption from service 
tax,  the  numerator  (subsidy  amount)  was  calculated  on  the  basis  of  the  exempted 
amounts during the RIP. 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 the numerator.  

(96)  Unlike  raw  materials,  capital  goods  are  not  physically  incorporated  into  the  finished 
goods. Accordingly, in regard to exemptions from payment of taxes on purchases of 
capital goods, the subsidy amount was calculated, in accordance with Article 7(3) of 
the  basic  Regulation,  on  the  basis  of  the  unpaid  customs  duty  on  imported  capital 

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goods  spread  across  a  period  which  reflects  the  normal  depreciation  period  of  such 
capital  goods  in  the  industry  concerned.  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. The 
commercial  interest  rate  during  the  RIP  in  India  was  considered  appropriate  for  this 
purpose.  Where  substantiated  claims  were  made,  fees  necessarily  incurred  to  obtain 
the subsidy were deducted in accordance with Article 7(1)(a) of the basic Regulation. 

(97) 

In  accordance  with  Article  7(2)  of  the  basic  Regulation  these  subsidy  amounts  thus 
established  under  recital  (95)  and  recital  (96)  above  were  allocated  over  the  export 
turnover generated during the RIP as the appropriate denominator, because the subsidy 
is  contingent  upon  export  performance  and  it  was  not  granted  by  reference  to  the 
quantities manufactured, produced, exported or transported. The subsidy margin thus 
obtained was 5,4 %. 

6. 

INCOME TAX EXEMPTION SCHEME ('ITES') 

(98)  Under this scheme exporters could avail the benefit of a partial income tax exemption 
on  profits  derived  from  export  sales.  The  legal  basis  for  this  exemption  was  set  by 
Section 80HHC of the ITA.  

(99)  This provision was abolished for the assessment year 2005-2006 (i.e. for the financial 
year from 1 April 2004 to 31 March 2005) onwards and thus 80HHC of the ITA does 
not confer any benefits after 31 March 2004. The co-operating exporting producers did 
not  avail  any  benefits  under  this  scheme  during  the  RIP.  Consequently,  since  the 
scheme has been withdrawn, it shall therefore not be countervailed, in accordance with 
Article 15(1) of the basic Regulation. 

7. 

EXPORT CREDIT SCHEME (‘ECS’)  

(a) Legal basis 

(100)  The details of the scheme are set out in the Master Circular DBOD No. DIR.(Exp).BC 
02/04.02.02/2007-08  (Export  Credit  in  Foreign  Currency)  and  the  Master  Circular 
DBOD No. DIR.(Exp).BC 01/04.02.02/2007-08 (Rupee Export Credit) of the Reserve 
Bank of India (‘RBI’), which is addressed to all commercial banks in India. 

(b) Eligibility 

(101)  Manufacturing  exporters  and  merchant  exporters  are  eligible  for  this  scheme.  It  was 

established that three of the exporting producers availed of benefits under the ECS. 

(c) Practical implementation 

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

(103)  As  a  result  of  the  RBI  Master  Circulars  exporters  can  obtain  export  credits  at 
preferential interest rates as compared with the interest rates for ordinary commercial 
credits ("cash credits"), which are purely set under market conditions. The difference 

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21 

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in  rates  might  decrease  for  companies  with  good  credit  ratings.  In  fact,  high  rating 
companies might be in a position to obtain export credits and cash credits at the same 
conditions.  

(d)  Conclusion on the ECS 

(104)  The  preferential  interest  rates  of  an  ECS  credit  set  by  the  RBI  Master  Circulars 
mentioned in recital (100) can decrease the interest costs of an exporter as compared 
with credit costs purely set by market conditions and confer in this case a benefit in the 
meaning of Article 2(2) of the basic Regulation on such exporter. Export financing is 
not per se more secure than domestic financing. In fact, it is usually perceived as being 
more  risky  and  the  extent  of  security  required  for  a  certain  credit,  regardless  of  the 
finance  object,  is  a  purely  commercial  decision  of  a  given  commercial  bank.  Rate 
differences with regard to different banks are the result of the methodology of the RBI 
to  set  maximum  lending  rates  for  each  commercial  bank  individually.  In  addition, 
commercial  banks  would  not  be  obliged  to  pass  through  to  borrowers  of  export 
financing any more advantageous interest rates for export credits in foreign currency. 

(105)  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)(a)(iv)  of  the  Regulation.  In  this  context,  it  should  be  noted  that  neither 
Article  2(1)(a)(iv)  of  the  basic  Regulation  nor  the  ASCM  require  a  charge  on  the 
public accounts, e.g. reimbursement of the commercial banks by the GOI, to establish 
a subsidy, but only government direction to carry out functions illustrated in points (i), 
(ii)  or  (iii)  of  Article  2(1)(a)  of  the  basic  Regulation.  The  RBI  is  a  public  body  and 
falls  therefore  under  the  definition  of  "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,  within  the  meaning  of  the  second  indent  of  Article  2(1)(a)(iv)  of  the 
basic Regulation, since the commercial banks are bound by the conditions it imposes, 
inter  alia,  with  regard  to  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 their net bank credit towards export finance. This 
direction  obliges  commercial  banks  to  carry  out  functions  mentioned  in  Article 
2(1)(a)(i) of the basic Regulation, in this case provide 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 differs, in no 
real sense, from practices normally followed by governments, within the meaning of 
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. 

(e) Calculation of the subsidy amount 

(106)  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  for  ordinary  commercial  credits  used  by  the  co-operating  exporting 
producers.  This  subsidy  amount  (numerator)  has  been  allocated  over  the  export 
turnover during the RIP as appropriate denominator in accordance with Article 7(2) of 
the basic Regulation, because the subsidy is contingent upon export performance and 
it was not granted by reference to the quantities manufactured, produced, exported or 
transported.  

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(107)  Three co-operating exporting producers obtained benefits from this scheme during the 

RIP ranging from 0,3% to 0,4 %. 

8. 

PACKAGE SCHEME OF INCENTIVES (PSI) 

(a) Legal basis 

(108)  In previous investigations regarding PET film, including the review investigation that 
led  to  the  imposition  by  Council  Regulation  (EC)  No  367/2006  of  the  definitive 
countervailing  duty  currently  in  force,  several  Indian  State  schemes  involving 
incentives granted to local companies were investigated. The State schemes fall under 
the  heading  'Package  Scheme  of  Incentives'  (PSI),  as  there  can  be  different  kind  of 
incentives  involved.  The  investigation  established  that  a  company's  entitlement  to 
benefits under the scheme is stipulated in the 'Eligibility Certificate'. The investigation 
revealed  that  two  of  the  co-operating  producers  enjoyed  trade  tax  (sales  tax) 
exemption under the PSI during the RIP pursuant to Section 4A of the State of Uttar 
Pradesh Trade Tax Act. This tax provision excuses home-market sales by a company 
from payment of sales tax (both local sales tax and central sales tax). 

(b) Eligibility 

(109)  In order to be eligible, companies must as a general rule invest in less developed areas 
of a state either by setting up a new industrial establishment or by making a large scale 
capital 
industrial 
establishment.  The  main  criterion  to  establish  the  amount  of  incentives  is  the 
classification of the area in which the enterprise is or will be located and the size of the 
investment. 

in  expansion  or  diversification  of  an  existing 

investment 

(c) Practical implementation 

(110)  Under the sales tax exemption schemes, designated units were not required to collect 
any  sales  tax  on  their  sales  transactions.  Similarly,  designated  units  were  exempted 
from the payment of sales tax on their purchases of goods from suppliers eligible for 
the schemes. Whereas the exemption in relation to sales transaction is not considered 
to  confer  any  benefit  on  the  designated  sales  units,  the  exemption  in  relation  to 
purchase  transactions,  however,  does  confer  a  benefit  on  the  designated  purchasing 
units. 

(d) Disclosure comments 

(111)  Following disclosure, one exporting producer noted that, when quantifying the benefit 
received  under  this  scheme,  it  has  been  considered  that  the  suppliers  of  a  main  raw 
material  used  in  the  production  of  the  product  concerned  enjoyed  exemption  from 
sales tax. The sales invoices, however, revealed that the suppliers in question did, in 
fact,  charge  the  tax  on  their  sales  to  the  company  concerned.  Consequently,  as  the 
sales tax was paid by the company, no countervailable benefit arose for the exporting 
producer on these purchases, and the amount of subsidy was revised accordingly. 

(e) Conclusion 

(112)  The PSI provides subsidies within the meaning of Article 2(1)(a)(ii) and Article 2(2) 
of  the  basic  Regulation.  The  exemption  from  payment  of  sales  taxes  on  purchases 
constitutes a financial contribution, since this concession decreases the Government's 
revenue which would be otherwise due. In addition, this exemption confers a benefit 
upon the companies as it improves their liquidity. 

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23 

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(113)  The  PSI  is  only  available  to  companies  having  invested  within  certain  designated 
geographical  areas  within  the  jurisdiction  of  a  State  in  India.  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. 

(f) Calculation of the subsidy amount 

(114)  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. 

(115)  Pursuant  to  Article  7(2)  of  the  basic  Regulation,  the  amount  of  subsidy  (numerator) 
has then been allocated over the total turnover of export and domestic sales during the 
review investigation period as the appropriate denominator, because the subsidy is not 
export-contingent and it was not granted by reference to the quantities manufactured, 
produced, exported or transported.  

(116)  The two co-operating exporting producers obtained subsidies from this scheme during 

the RIP of 0,3 % and 1,4 % respectively. 

9. 

AMOUNT OF COUNTERVAILABLE SUBSIDIES 

(117)  It  is  recalled  that  in  Council  Regulation  (EC)  No  367/2006  and  subsequent 
amendments,  referred  to  in  recitals  (2),  (3)  and  (4)  above,  the  amount  of 
countervailable subsidies, expressed ad valorem, was found to be ranging from 12 % 
to 19,1 % for the concerned co-operating exporting producers that co-operated in the 
present partial interim review 

(118)  During  the  present  partial  interim  review  the  amount  of  countervailable  subsidies, 
expressed  ad  valorem,  was  found  to  be  ranging  from  5,4  %  to  8,6  %,  as  listed 
hereunder: 

SCHEME→  AAS(*)  DEPBS(*) EPCGS(*) SEZS(*) ECS(*) 

PSI  Total

COMPANY↓ 

 % 

%  

%  

%  

%  

%   %  

Ester 
Industries 
Limited 

Garware 
Polyester 
Limited 

Polyplex 
Corporation 
Limited 

SRF 
Limited 

Uflex 
Limited 

5,8 

1,0 

0,4 

7,2 

0,5 

3,9 

1,0 

Negligible 

5,4 

1,7 

3,2 

1,9 

0,4 

1,4 

8,6 

5,4 

5,4 

2,1 

2,7 

1,0 

0,3 

0,3 

6,4 

(*) Subsidies marked with an asterisk are export subsidies 

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10. 

COUNTERVAILING MEASURES 

(119)  In line with the provisions of Article 19 of the basic Regulation and the grounds of this 
partial interim review stated under point 3 of the Notice of Initiation, it is established 
that  the  level  of  subsidisation  with  regard  to  the  concerned  exporting  producers  has 
decreased and, therefore, the rates of countervailing duties imposed to these exporting 
producers by Council Regulation (EC) No 367/2006 should be amended accordingly. 

(120)  The  amended  countervailing  duty  rates  should  be  established  at  the  new  rates  of 
subsidisation found during the present interim review, as the injury margins calculated 
in the original anti-subsidy investigation remains higher. 

(121)  With  regard  to  all  other  companies  that  were  not  concerned  by  the  present  partial 
interim review, it is noted that the actual modalities of the investigated schemes and 
their  countervailability  have  not  changed  with  respect  to  the  previous  investigation. 
Thus there is no reason to re-calculate the subsidy and duty rates of these companies. 
Consequently,  the  rates  of  the  duty  applicable  to  all  other  parties  except  the  five 
exporting producers that co-operated in the current review remain unchanged. 

(122)  The individual company countervailing duty rates specified in this Regulation reflect 
the situation found during the partial interim review. Thus, they are solely applicable 
to  imports  of  the  product  concerned  produced  by  these  companies.  Imports  of  the 
product concerned manufactured by any other company not specifically mentioned in 
the  operative  part  of  this  Regulation,  including  entities  related  to  those  specifically 
mentioned,  cannot  benefit  from  these  rates  and  shall  be  subject  to  the  duty  rate 
applicable to “all other companies”. 

(123)  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 Commission12 forthwith with 
all  relevant  information,  in  particular  any  modification  in  the  company’s  activities 
linked  to  production,  domestic  and  export  sales  associated  with,  for  instance,  that 
name  change  or  that  change  in  the  production  and  sales  entities.  If  appropriate,  and 
after  consultation  of  the  Advisory  Committee,  the  Regulation  will  be  amended 
accordingly by updating the list of companies benefiting from individual duty rates. 

11. 

ANTI-DUMPING MEASURES 

(124)  As  provided  in  the  last  paragraph  under  point  3  of  the  Notice  of  Initiation,  the 
amendment of the countervailing duty rate will have an impact on the definitive anti-
dumping  duty  imposed  by  Regulation  (EC)  No  1292/2007,  as  the  latter  in  previous 
anti-dumping investigations was adjusted in order to avoid any double counting of the 
effects of benefits from export subsidies (it is recalled that the definitive anti-dumping 
duty was based on the dumping margin since the latter was found to be lower than the 
injury  elimination  level).  Article  24(1)  of  the  basic  Regulation  and  Article  14(1)  of 
Council  Regulation  (EC)  No  384/96  of  22  December  1995  on  protection  against 
dumped imports from countries not members of the European Community provide that 
no product shall be subject to both anti-dumping and countervailing measures for the 
purpose  of  dealing  with  one  and  the  same  situation  arising  from  dumping  or  export 
subsidisation.  It  was  found  in  the  original  investigation  that  certain  of  the  subsidy 
schemes investigated which were countervailable, constituted export subsidies within 

12 

European  Commission  –Directorate  General  for  Trade-  Directorate  B  –  N105,  04/90.  –Rue  de  la 
Loi/Wetstraat 200- B-1049 Brussels. 

EN 

25 

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the  meaning  of  Article  3(4)(a)  of  the  basic  Regulation.  As  such,  these  subsidies 
affected the export prices of the Indian exporting producers, thus leading to increased 
margins of dumping. Therefore, pursuant to Article 24(1) of the basic Regulation, the 
definitive anti-dumping duty rates were adjusted to reflect the actual dumping margin 
remaining  after  the  imposition  of  the  definitive  countervailing  duty  offsetting  the 
effect  of  the  export  subsidies  (see  recital  (59)  of  Regulation  (EC)  No  366/2006  and 
recital (11) of Regulation (EC) No 1424/2006).  

(125)  Consequently,  the  definitive  anti-dumping  duty  rates  for  the  exporting  producers 
concerned  must  now  be  adjusted  to  take  account  of  the  revised  level  of  benefit 
received from export subsidies in the RIP of the current anti-subsidy investigation to 
reflect  the  actual  dumping  margin  remaining  after  the  imposition  of  the  adjusted 
definitive countervailing duty offsetting the effect of the export subsidies. 

(126)  The  dumping  margins  previously  established  in  respect  of  Ester  Industries  Limited, 
Garware Polyester Limited, Polyplex Corporation Limited and Uflex Limited (at that 
time  known  as  Flex  Industries  Limited)13,  were  established  in  Council  Regulation 
(EC) No 366/2006 (see recital 50) and amounted for the four companies concerned to 
29,3%, 20,1%, 3,7% and 3,2% respectively. The level of the dumping margin for SRF 
Limited established in Council Regulation (EC) No 1424/2006 was 15,5 %. 

(127)  Taking into the account the benefits from exports subsidies found in the RIP and the 
level  of  the  dumping  margin  previously  established,  the  margins  and  duty  rates 
applicable to the companies concerned should therefore be calculated as indicated in 
the table below: 

Company 

Export 
Subsidy 
Margin 

Total 
Subsidy 
Margin 

Dumping 
Margin 
previously 
established 

CVD 
duty 

AD 
duty 

Total 
duty 
rate 

Ester  Industries 
Limited 

Garware 
Polyester 
Limited 

Polyplex 
Corporation 
Limited 

7,2 % 

7,2 %

29,3 % 7,2 %  22,1 % 

29,3 %

5,4 % 

5,4 %

20,1 % 5,4 %  14,7 % 

20,1 %

7,2% 

8,6%

3,7 % 8,6 % 

0,0 % 

8,6 %

SRF Limited 

5,4 % 

5,4 %

15,5 % 5,4 %  10,1 % 

15,5 %

Uflex Limited 

6,1 % 

6,4 %

3,2 % 6,4 % 

0,0 % 

6,4 %

13 

OJ L 68, 8.3.2006, p.6.  

EN 

26 

   EN 

 
 
                                                 
(128)  In  order  to  take  account  of  the  revised  level  of  anti-dumping  duty  for  the  five 
exporting  producers  concerned,  Regulation  (EC)  No  1292/2007  should  be  amended 
accordingly, 

HAS ADOPTED THIS REGULATION: 

Article 1 

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

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

Company 

Definitive duty (%)  TARIC Additional Code 

Ester  Industries  Limited,  75-76,  Amrit 
Nagar,  Behind  South  Extension  Part-1, 
New Delhi 110 003, India 

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

7,2 

5,4 

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

17,1 

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

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

SRF  Limited,  Block  C,  Sector  45, 
Greenwood  City,  Gurgaon  122003, 
Haryana, India 

8,7 

8,6 

5,4 

Uflex Limited, A-1, Sector 60, Noida 201 
301 (U.P.), India 

6,4 

All other companies 

19,1 

" 

A026 

A028 

A030 

A031 

A032 

A753 

A027 

A999’ 

Article 2 

Article 2(2) of Council Regulation (EC) No 1292/2007 shall be replaced by the following: 

"2. 
The rate of the definitive anti-dumping duty applicable to the net, free-at Community-
frontier price, before duty, of the products manufactured by the companies listed below, shall 
be as follows: 

EN 

27 

   EN 

 
Company 

Definitive Duty (%)  TARIC Additional Code 

Ester  Industries  Limited,  75-76,  Amrit 
Nagar,  Behind  South  Extension  Part-1, 
New Delhi 110 003, India 

22,1 

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

14,7 

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

0,0 

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

18,0 

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

0,0 

SRF  Limited,  Block  C,  Sector  45, 
Greenwood  City,  Gurgaon  122003, 
Haryana, India 

10,1 

Uflex Limited, A-1, Sector 60, Noida 201 
301 (U.P.), India 

0,0 

All other companies 

17,3 

" 

A026 

A028 

A030 

A031 

A032 

A753 

A027 

A999’ 

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

Article 3 

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

Done at Brussels, […] 

For the Council 
The President 

EN 

28 

   EN