Council Regulation (EC) No 1286/2008 of 16 December 2008 amending Regulation (EC) No 193/2007, imposing a definitive countervailing duty on imports of certain polyethylene terephthalate, originating in India and amending Regulation (EC) No 192/2007 imposing a definitive anti-dumping duty on imports of certain polyethylene terephthalate, originating in, inter alia , India
Date: 2008-12-16
Institutions: Council of the European Union
Subjects: India, anti-dumping duty, countervailing charge, import, originating product, plastics

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(Acts adopted under the EC Treaty/Euratom Treaty whose publication is obligatory)

I

REGULATIONS

COUNCIL REGULATION (EC) No 1286/2008

of 16 December 2008

amending Regulation (EC) No 193/2007, imposing a definitive countervailing duty on imports of
certain polyethylene terephthalate, originating in India and amending Regulation (EC) No 192/2007
imposing a definitive anti-dumping duty on imports of certain polyethylene terephthalate,
originating in, inter alia, India

THE COUNCIL OF THE EUROPEAN UNION,

Having regard to the Treaty
Community,

establishing the European

Having regard to Council Regulation (EC) No 2026/97 of
6 October 1997 on protection against subsidised imports
from countries not members of the European Community (1)
(the basic Regulation), and in particular Articles 15 and 19
thereof,

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

Whereas:

(1)

(2)

A. PROCEDURE

I. PREVIOUS INVESTIGATION AND EXISTING MEASURES

On 30 November 2000, by Regulation (EC) No
2603/2000 (2), the Council
imposed definitive counter­
certain polyethylene
vailing duties on imports of
terephthalate (PET) originating in,
India (the
inter alia,
country concerned) (the original investigation).

Following an expiry review, the Council, by Regulation
(EC) No 193/2007 (3),
imposed a definitive counter­
certain polyethylene
vailing
terephthalate, originating in India (the anti-subsidy Regu­

duty on imports of

(1) OJ L 288, 21.10.1997, p. 1.
(2) OJ L 301, 30.11.2000, p. 1.
(3) OJ L 59, 27.2.2007, p. 34.

(3)

(4)

(5)

lation) for a further period of five years. The product
concerned falls within the CN code 3907 60 20. The
the fixed duty ranges between 0 and 106,5
rate of
EUR/tonne for
individually named exporters with a
residual duty rate of 41,3 EUR/tonne imposed on
imports from other exporters.

Furthermore, by Regulation (EC) 192/2007 (4),
the
Council imposed a definitive anti-dumping duty on the
same product originating in India (the anti-dumping
Regulation). Under this Regulation the rate of the fixed
duty ranges between 88,9 and 200,9 EUR/tonne for
individually named exporters with a residual duty rate
of 181,7 EUR/tonne imposed on imports from other
exporters.

In line with the principle that no product shall be subject
to both anti-dumping and countervailing duties for the
purpose of dealing with one and the same situation
arising from dumping or from export subsidisation, the
level of anti-dumping duties in the anti-dumping Regu­
lation takes into account the amount of countervailing
duty
in
accordance with Article 14(1) of the basic Regulation.

anti-subsidy Regulation,

imposed by

the

II.

INITIATION OF A PARTIAL INTERIM REVIEW

Following the imposition of the definitive countervailing
duty the Government of India (GOI) submitted 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
these changes are of a
Act) have changed and that
the
it was argued that
lasting nature. Consequently,
level of subsidisation was likely to have decreased and
thus measures that had been established partly on these
schemes should be revised.

(4) OJ L 59, 27.2.2007, p. 1.

(6)

(7)

(8)

(9)

(10)

(11)

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sufficient

The Commission examined the evidence submitted by
the GOI and considered it
to justify the
initiation of a review in accordance with the provisions
of Article 19 of the basic Regulation, limited to the level
polyethylene
of
subsidisation
terephthalate, originating in India. After consultation of
the Advisory Committee, the Commission initiated, by a
notice published in the Official
the European
Union (1) (‘the Notice of Initiation’), an ex officio partial
interim review of Regulation (EC) No 193/2007.

Journal of

imports

certain

(12)

The Commission therefore sent and obtained a reply to
the questionnaire from only one producer which was
eligible
review, namely Pearl Engineering
Polymers Ltd (the company). A questionnaire was also
addressed to the GOI. Replies were received from both
the company and the GOI.

this

for

(13)

The Commission sought and verified all
information it
deemed necessary for the determination of subsidisation.
Verification visits were carried out at the premises of the
following interested parties:

The purpose of the partial interim review investigation is
to assess the need for the continuation, removal or
amendment of
in respect of
the existing measures
those companies which benefited from one or both the
changed subsidy schemes, where sufficient evidence was
provided in line with the relevant provisions of
the
interim review investi­
Notice of Initiation. The partial
gation 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.

III.

INVESTIGATION PERIOD

The investigation covered the period from 1 April 2006
to 31 March 2007 (the review investigation period or
RIP).

(14)

IV. PARTIES CONCERNED BY THE INVESTIGATION

The Commission officially informed the GOI and those
Indian exporting producers who cooperated in the
previous investigation, were mentioned under Regulation
(EC) No 193/2007 as benefiting from any of the two
allegedly changed subsidy schemes and that were listed in
the Annex to the Notice of Initiation, as well as the
Community producers, of the initiation of the partial
interim review investigation.
Interested parties had the
opportunity to make their views known in writing and
to request a hearing. The written and oral comments
submitted by the parties were considered and, where
appropriate, taken into account.

In view of the number of parties involved in this review,
the use of sampling techniques for the investigation of
subsidisation was
accordance with
in
Article 27 of the basic Regulation.

envisaged

information requested for

Two exporting producers made themselves known and
provided the
sampling.
sampling techniques was not
Therefore,
the use of
considered necessary. One of
two exporting
that had submitted a sampling form did
producers
however later notify the Commission that
it did not
intend to complete a full questionnaire and provide the
data necessary for the purpose of the investigation.

the

1. Government of India

Ministry of Commerce, New Delhi.

2. Exporting producers in India

Pearl Engineering Polymers Ltd, New Delhi.

V. DISCLOSURE AND COMMENTS ON PROCEDURE

the

non-cooperating

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 rate
applicable to the sole cooperating Indian producer and
to
also
mentioned in the Annex to the Notice of Initiation as
well as the intention to maintain existing measures for all
other companies which did not cooperate 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.

exporting

producer

B. PRODUCT CONCERNED

(15)

The product covered by this review is the same product
as the one concerned by Regulation (EC) No 193/2007,
i.e. PET with a viscosity number of 78 ml/g or higher,
according to ISO Standard 1628-5, originating in the
country concerned. It is currently classifiable within CN
code 3907 60 20.

C. SUBSIDIES

I.

INTRODUCTION

(16) On the basis of the information submitted by the GOI
and the sole cooperating exporting producer and the
replies to the Commission’s questionnaire, the following
schemes, which allegedly
granting of
subsidies, were investigated:

involve

the

(1) OJ C 227, 27.9.2007, p. 16.

(a) Advance Authorisation Scheme (formerly known as

Advance Licence Scheme) (AAS);

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(b) Duty Entitlement Passbook Scheme (DEPS);

II. SPECIFIC SCHEMES

1. Advance Authorisation Scheme (AAS)

(c) Export Promotion Capital Goods Scheme (EPCGS);

(a) Legal basis

(d) Income Tax Exemption Scheme (ITES);

(e) Focus Market Scheme (FMS);

(f) Target Plus Scheme (TPS).

(21)

(22)

(17)

(b) (c)

The schemes (a)
(e) and (f) specified above are
based on the Foreign Trade (Development and Regu­
lation) 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,
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.

i.e.

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 Regu­
lation (EC) No 193/2007 of the definitive countervailing
duty currently in force.

(b) Eligibility

The AAS consists of six sub-schemes, as described in
in recital 23. Those sub-schemes differ,
more detail
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
such as
suppliers of an export oriented unit (EOU), are eligible
intermediate
for AAS
eligible
suppliers
for
‘deemed
sub-schemes
Advance Release Order (ARO) and back-to-back inland
letter of credit.

to manufacturer-exporters
export’
benefits

Eventually,
are
the

the EXIM-policy 04-09,

deemed

export.

under

(18)

The Income Tax Schemes specified above under (d) are
based on the Income Tax Act of 1961, which is amended
yearly by the Finance Act.

(c) Practical implementation

(23) Advance authorisations can be issued for:

(19)

In accordance with Article 11(10) of the basic Regu­
lation, 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 subsi­
disation.

(20) One interested party, representing Community industry
alleged that a number of other schemes and subsidies
continued to be available to Indian exporters. However,
no definite evidence has emerged from the information
showing that
these schemes were used by the coop­
erating exporting producer. Therefore these matters
have not been pursued further for the purpose of this
specific proceeding.

input materials

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

for

(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 manufac­
turing any of the items falling under such a product
group. It can choose to export any resultant product
falling under the product group using such duty-
exempt material;

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(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
can import duty-free
the
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;

intermediate product

(iv) deemed exports:

this

sub-scheme allows a main
contractor to import free of duty inputs which are
required in manufacturing goods
to be sold as
‘deemed exports’
to the categories of customers
mentioned in paragraph 8.2(b) to (f), (g), (i) and (j)
of the EXIM-policy 04-09. According to the GOI,
in
to those
deemed exports
leave
which the goods
the
supplied do not
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
special
economic zone (SEZ);

company situated in a

transactions

to a

refer

(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
the items specified therein. The
upon delivery of
the ARO entitles the indigenous
endorsement of
supplier to the benefits of deemed exports as set
out in paragraph 8.3 of the EXIM-policy 04-09 (i.e.
export,
AAS
supplies/deemed
deemed export drawback and refund of
terminal
excise duty). The ARO mechanism refunds taxes
and duties to the supplier instead of refunding the
same to the ultimate exporter in the form of draw­
back/refund of duties. The refund of taxes/duties is
available both for
inputs as well as
indigenous
imported inputs;

intermediate

for

(24)

(25)

It was established that during the RIP, the cooperating
two sub-
exporter only obtained concessions under
schemes linked to the product concerned,
(i) AAS
physical exports and (iv) AAS for deemed exports. It is
therefore not necessary to establish the countervailability
of the remaining unused sub-schemes.

i.e.

the
of

countervailing

imposition by Regulation (EC) No
Following
193/2007
duty
the
definitive
currently in force, the GOI has modified the verification
system applicable to AAS. In concrete terms, for verifi­
cation 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 cer­
tificate 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
verification
i.e. to keep a true and proper account of
provisions,
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).

follow the

previously

applicable

and

both

deemed

exports,

and the

export obligation are

(26) With regard to the sub-schemes used during the RIP by
i.e. physical
the sole cooperating exporting producer,
import
the
exports
allowance
fixed in
volume and value by the GOI and are documented on
the Authorisation. In addition, at the time of import and
of export, the corresponding transactions are to be docu­
mented by Government officials on the Authorisation.
The volume of imports allowed under this scheme is
determined by the GOI on the basis of standard input-
output norms (SIONs). SIONs exist for most products,
including the product concerned and are published in the
HOP II 04-09.

(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
items being sourced indi­
value and volume of
importation. The indigenous
genously instead of
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).

(27)

(28)

In this respect it should be noted that the SIONs are
regularly revised. Since the one cooperating exporter
used licences issued at different times, this also meant
that different SIONs were applied by this company
under the RIP.

Imported input materials are not transferable and have to
be used to produce the resulting 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 six months each).

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(29)

raw materials
the
for

The review investigation established that while the coop­
erating exporting producer could establish the total
there was no actual
consumption of
consumption register
concerned.
Consumption was only presumed to be in line with
the SIONs.
It was therefore not possible to establish
whether SION requirements, stipulated under specific
authorisations/licences, with respect
to duty-free input
materials exceed the material needed to produce the
reference quantity of the resulting export product.

product

(30) Moreover, the review investigation established that raw
materials were imported under three different authoris­
ations/licences and different SION norms and then were
mixed and physically incorporated in the production
process of the same exported good. The fact that there
are three different SIONs with different consumption
norms for each of the raw materials further underlines
the problem in establishing the actual consumption of
the cooperating exporter. In this respect, it is clear that
an actual consumption register is a basic requirement in
order to allow for verification as to whether the duty-free
input materials exceed the material needed to produce
the reference quantity of the resulting export product.

(33)

(31)

The review investigation also established that the verifi­
cation requirements stipulated by the Indian authorities
were either not honoured or not yet tested in practice.
For Advance Licences issued before 13 May 2005 the
necessary actual consumption and stock registers (i.e.
Appendix 18) were not sent to the relevant authorities
and hence not controlled by GOI. For Advance Author­
isations issued after 13 May 2005 the necessary actual
consumption and stock registers are required but GOI
had not yet verified the compliance of these registers
the
with EXIM policy requirements.
registers were verified by external chartered accountants
as required by the relevant Indian legislation mentioned
under recital 25 but there were no records kept either by
the company or by the chartered accountant on how this
certification process took place. There was no audit plan
or any other supporting material of the audit performed,
no recorded information on the methodology used and
the specific requirements needed for such scrupulous
work that
requires detailed technical knowledge on
production processes, EXIM policy requirements and
accounting procedures. Account taken of this situation,
it is considered that the investigated exporter was not
able to demonstrate that the relevant EXIM provisions
were met.

In particular,

request

requires

to meet

legal provision that

an audited
national
company to maintain a record of how an audit was
carried out. On the contrary, Indian law stipulates that
the working papers are the property of
the auditor.
such circumstances and considering that no
Under
prior
the chartered accountant had
been made before the verification visit, the fact that the
audited company was not
in the possession of such
supporting documents at the time of the visit should
not be held against it. Furthermore, it was also claimed
that
the basic Regulation in any event would not
authorise the Commission services to verify documents
held outside the investigated company such as would be
the case with an independent accountant.
It was also
argued that the actual consumption of the sole coop­
erating producer had been higher than the SION norms
for every input and that there was no excess remission of
duties.

In this respect it is recalled that the verification process
performed by the chartered accountant and the issuing of
the relevant certificate form part of
the verification
system introduced by the GOI in its EXIM policy. To
this end the EXIM policy has introduced the chartered
accountant as an actor in the implementation of the
system and the Commission had to examine whether
the aforesaid verification system was effectively applied.
The fact that the company could not show that either
itself nor the assigned chartered account hold any record
on the checks performed in order to issue the EXIM
the
policy
company was not
the
relevant EXIM policy provisions were met. As to the
company’s claim that that there in any event was no
excess remission of duties it is recalled that the actual
situation found on the spot (i.e. mixture of inputs and
produced products, use of different SION norms, lack of
the by EXIM policy stipulated actual
consumption
registers) and pending the fulfilment of the necessary
final verification steps by the GOI, showed that any
to actual consumption and
calculation with respect
consequent excess
remission of duties per authoris­
ation/licence and SION norm was not feasible.

certificate
that
in a position to prove that

demonstrates

stipulated

(e) Conclusion

(34)

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 exporter.

(d) Disclosure comments

(32)

The cooperating exporter challenged the findings above,
in particular with respect to the conclusions as concerns
the chartered accountant as detailed in recital 31. To this
end it was claimed that there is no national or inter­

(35)

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

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under

amounts

imported

amounts of

input materials

(36) None of the two 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
item (i),
conform to the rules laid down in Annex I
Annex II (definition and rules for drawback) and Annex
III (definition and rules for substitution drawback) to the
basic Regulation. The GOI did not effectively apply its
verification system or procedure to confirm whether and
consumed in the
inputs were
in what
production of the exported product (Annex II(II)(4) to
the basic Regulation and,
in the case of substitution
drawback schemes, Annex III(II)(2) to the basic Regu­
lation). The SIONs themselves cannot be considered a
verification system of actual consumption, since duty-
free
authoris­
ations/licences with different SION yields are mixed in
the same production process for an exporting good. This
type of process does not enable the GOI to verify with
sufficient precision what
inputs were
consumed in the export production and under which
SION benchmark they should be compared. Furthermore,
an effective control done by the GOI based on a correctly
kept actual consumption register either did not take place
or has not yet been completed. In addition, the GOI did
not carry out a further examination based on actual
inputs involved, although this would normally need to
be carried out in the absence of an effectively applied
verification system (Annex II(II)(5) and Annex III(II)(3) to
the basic Regulation). Moreover,
it is recalled that the
company in question did not have a consumption
real
register
for
consumption of
type.
Therefore, even if an efficient control system had been
put in place it would not have been possible for the GOI
to ascertain what amounts inputs were consumed in the
production of
the in­
volvement of chartered accountants in the verification
process has not led to the improvement of the verifi­
cation system as no detailed rules
exist on how
chartered accountants
should perform the entrusted
tasks and the information presented during the investi­
gation could not warrant the fulfilment of the aforesaid
rules laid down under the basic Regulation.

of
raw material per product

the exported product. Finally,

verification

allowed

that

a

(37)

These two sub-schemes are therefore countervailable.

(f) Calculation of the subsidy amount

(38)

the

systems,

In the absence of permitted duty drawback systems or
substitution drawback
countervailable
benefit is the remission of total import duties normally
due upon importation of inputs.
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) to the basic
Regulation only an excess remission of duties can be
countervailed, provided the conditions of Annexes II
and III to the basic Regulation are met. However, these

In this respect,

conditions were not fulfilled in the present case. Thus, if
an absence of an adequate monitoring process is estab­
lished, the above exception for drawback schemes is not
applicable and the normal rule of the countervailing of
the amount of (revenue forgone) unpaid duties, rather
than any purported excess remission, applies. As set
out in Annexes II(II) and III(II) to the basic Regulation
the burden is not upon the investigating authority to
calculate
contrary,
according to Article 2(1)(a)(ii) of the basic Regulation it
only has to establish sufficient evidence to refute the
appropriateness of an alleged verification system.

remission. To the

such excess

(39)

The subsidy amount for the exporter 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 two
sub-schemes used for the product concerned during the
RIP (nominator). 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
In accordance with
justified
subsidy
Article 7(2) of
this
amount has been allocated over the export
turnover
generated by the product concerned during the RIP as
is
appropriate
contingent upon export performance and was not
granted by reference to the quantities manufactured,
produced, exported or transported.

the basic Regulation,

claims were made.

denominator,

because

subsidy

the

(40)

The subsidy rate established in respect of this scheme
during the RIP for
cooperating producer
the sole
amounts to 12,8 %.

2. Duty Entitlement Passbook Scheme (DEPS)

(a) Legal basis

(41)

The detailed description of
paragraph 4.3 of
Chapter 4 of the HOP I 04-09.

the DEPS is contained in
the EXIM-policy 04-09 and in

(42)

It was found that the cooperating exporting producer
obtained no countervailable benefits under the DEPS. It
was therefore not found necessary to further analyse this
scheme in the scope of this investigation.

3. Export

Promotion

Capital Goods

Scheme

(EPCGS)

(a) Legal basis

(43)

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.

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(51)

(b) Eligibility

(44) Manufacturer-exporters, merchant-exporters

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

‘tied

(c) Practical implementation

(45) 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
scheme. Until
the
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.

imported under

goods

(46)

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

(d) Disclosure comments

(47) No comments with respect to EPCGS were submitted

upon disclosure.

the basic
within the meaning of Article 2(1)(a)(ii) of
Regulation. Capital goods are not covered by the scope
of such permissible systems, as set out in Annex I(i) to
the basic Regulation, because they are not consumed in
the production of the exported products.

(f) Calculation of the subsidy amount

in the

IP. The

The one cooperating exporter had not purchased any
capital goods
company continued
however to benefit
from duty exemptions for capital
goods purchased before the IP at the amount established
in the original investigation. As established in the original
investigation the subsidy amount obtained during the RIP
was calculated,
in accordance with Article 7(3) of the
basic Regulation, on the basis of the unpaid customs
duty on imported capital goods spread across a period
which reflects the actual depreciation period of such
capital goods of the exporting producer. In accordance
with the established practice, the amount so calculated
which is attributable to the RIP has been adjusted by
adding interest during this period in order to reflect
the full value of the benefit over time. Fees necessarily
incurred to obtain the
subsidy were deducted in
accordance with Article 7(1)(a) of the basic Regulation
the subsidy amount as
from this sum to arrive at
numerator. In accordance with Article 7(2) and 7(3) of
subsidy amount has been
the basic Regulation this
turnover during the review
allocated over the export
as
investigation
denominator,
export
upon
is
the
because
performance and it was not granted by reference to the
quantities manufactured, produced, exported or trans­
ported. The subsidy rate established with respect to the
benefit obtained by the company during the RIP was
0,3 %.

appropriate
contingent

period
subsidy

(e) Conclusion on EPCG Scheme

(48)

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.

4. Income Tax Exemption Scheme (ITES)

(a) Legal basis

S e c t i o n 8 0 H H C o f
1 9 6 1 ( I T A )

t h e I n c o m e T a x A c t

(52) 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.

(49)

the EPCGS is contingent

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

(53)

(50)

Finally, this scheme can not be considered a permissible
duty drawback system or substitution drawback system

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 sole cooperating exporting producer did not
avail of 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.

L 340/8

EN

Official Journal of the European Union

19.12.2008

5. Focus Market Scheme (FMS)

(a) Legal basis

(54)

The detailed description of
the FMS is contained in
Chapter 3.9 of the EXIM-policy 04-09 and in Chapter
3.20 of the HOP I 04-09. While the company reported
this scheme, the investigation revealed that no benefit
was received in the RIP. Since it was found that the
cooperating exporting producer did not obtain any coun­
tervailable benefits under this scheme, it was not found
necessary to further analyse it in the scope of this inves­
tigation.

6. Target Plus Scheme (TPS)

(a) Legal basis

(55)

the TPS is contained in
The detailed description of
Chapter 3.7 of the EXIM-policy 04-09 and in Chapter
3.2 of the HOP I 04-09.

(b) Eligibility

(56) Any manufacturing exporter is eligible to apply for this

scheme

(61)

(62)

(63)

(57)

(58)

(59)

(c) Practical implementation

This scheme aims at giving a premium to companies that
increase their export turnover growth. To this end the
scheme allows eligible companies to avail of duty credit
ranging between 5 % and 15 % of an amount based on
the difference between the FOB values of exports made in
two consecutive financial years.

Companies wishing to benefit from the scheme have to
file an application to the Ministry of Commerce and
industry. Once authorised, a licence
indicating the
amount of the duty credit is issued by the relevant auth­
orities.

scheme was discontinued in March 2006 and
This
replaced over time by two new schemes,
the Focus
Market Scheme and the Focus Product Scheme. The
to apply for TPS licence did however continue
right
until March 2007 and companies availing of
the
scheme may make use of the relevant duty credit enti­
tlements until March 2009.

(64)

(d) Disclosure comments

(60)

The cooperating producer considered that there was no
benefit accrued to the company in the RIP of this scheme
and considering that the scheme was withdrawn in 2006
it should not be countervailed. However, as detailed
above,
the investigation revealed that a benefit was
conferred on the company in the RIP and furthermore,

while the scheme indeed has been abandoned, companies
may continue to benefit from it until 2009.

(e) Conclusion on Target Plus Scheme

The TPS provides
subsidies within the meaning of
Article 2(1)(a) (ii) and Article 2(2) of the basic Regulation.
A TPS duty 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.
the TPS duty
credit confers a benefit upon the exporter, because it
improves its liquidity.

In addition,

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

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

is sufficient

in place

it

(f) Calculation of the subsidy amount

The amount of countervailable subsidies was calculated
in terms of the benefit conferred on the recipient, which
is found to exist during the RIP as booked by the coop­
erating exporting producer on an accrual basis as income
at the stage of export transaction. In accordance with
Article 7(2) and 7(3) of
the basic Regulation this
(nominator) has been allocated over
subsidy amount
the export
turnover during the RIP as appropriate
denominator, because the subsidy is contingent upon
export performance
granted by
reference to the quantities manufactured, produced,
exported or transported.

and it was not

19.12.2008

EN

Official Journal of the European Union

L 340/9

(65)

The subsidy rate established with regard to this scheme
during the RIP for
the sole cooperating exporting
producer amounts to 0,7 %.

exporting producer cooperating with the present partial
interim review.

III. AMOUNT OF COUNTERVAILABLE SUBSIDIES

(66)

It is recalled that of the subsidy margin, established in the
original investigation was found to be 5,8 % for the sole

(67) During the present partial interim review the amount of
countervailing subsidies, expressed ad valorem, was fount
to be 13,8 %, as listed hereunder:

Scheme

ALS

DEPS

EPCGS

ITIRAD

FMS

Company

%

Pearl Engineering Polymers Ltd

12,8

%

0

%

0,3

%

0

%

0

TPS

%

0,7

Total

%

13,8

(68) Account taken of the above it is concluded that the level
of subsidisation with regard to the sole cooperating
exporting producer has increased.

and Reliance

neering
Industries mentioned under
Article 1(2) of Regulation (EC) No 193/2007 remain
unchanged.

D. COUNTERVAILING MEASURES AND ANTI-DUMPING
MEASURES

(72)

(69)

(70)

I. COUNTERVAILING MEASURES

this partial

In line with the provisions of Article 19 of the basic
Regulation and the grounds of
interim
review stated under point 3 of the Notice of Initiation,
it is established that the margin of subsidisation with
regard to the sole cooperating producer has increased
from 5,8 % to 13,8 % and, therefore, the rate of counter­
imposed to this exporting producer by
vailing duty,
Regulation (EC) No 193/2007 has
to be amended
accordingly.

facts

The second company that was concerned with the
interim review Reliance Industries Ltd,
present partial
had the highest subsidy margin in the original
investi­
gation but did not cooperate in this review. Since this
company did not cooperate an assessment had to be
based on best
in accordance with
available
Article 28 of the basic Regulation. In this respect and
in view of the findings as concern the one cooperating
this non-cooperating
exporter,
exporting producer will continue to avail of benefits
under
least
the investigated subsidisation schemes at
the same rate as that established for the cooperator. It
must thus be concluded that the level of subsidisation
with regard to the one non-cooperating exporting
producer concerned by the review has also increased to
13,8 % and, therefore, the rate of countervailing duty,
imposed on this exporting producer by Regulation (EC)
No 193/2007, has to be amended accordingly.

is also likely that

it

(71) With regard to companies that cooperated in the original
investigation but that were not identified as concerned by
the investigation in the Annex to the Notice of Initiation,
there was no indication that
the countervailing and
dumping duty rates applicable to such companies need
to be recalculated. Consequently, the individual rates of
the duty applicable to all other parties except Pearl Engi­

(73)

(74)

(75)

Conversely, as concerns the companies that cooperated
neither in this review nor in the original
investigation,
these must be considered to continue to avail of benefits
under the investigated subsidisation schemes at least the
same rate as that established for the sole cooperator. In
order to avoid granting a bonus for non-cooperation it is
considered appropriate to establish level of subsidisation
applicable to ‘all other companies’ as the highest rate set
for any company cooperating in the original
investi­
gation i.e. 13,8 %.

The amended countervailing duty rates should be estab­
lished at the level of the new rates of subsidisation found
injury margins
during the present
calculated in the original
anti-subsidy investigation
remain higher.

review,

the

as

company

individual

countervailing duty

rates
The
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
this Regulation,
mentioned in the operative part of
including
specifically
mentioned, cannot benefit
from these rates and shall
to the duty rate applicable to ‘all other
be subject
companies’.

entities

related

those

to

is recalled that

In order to avoid that fluctuations in the PET prices
caused by variations in the crude oil prices result in
higher duties being collected it
the
measures in place have been set
in the form of a
specific duty per tonne. The amount set results from
the application of the countervailing duty rate to the
CIF export prices that were used for the calculation of
the injury elimination level in the original investigation.
The same method has been used for the purpose of
establishing the amended specific duty levels in the
context of this review.

L 340/10

EN

Official Journal of the European Union

19.12.2008

(76)

The margins and duty rates applicable should therefore
be calculated as indicated in the table below.

(79)

Countervailing
duty rate

Proposed counter­
vailing duty rate
(EUR/tonne)

Reliance Industries Ltd

Pearl Engineering Polymers
Ltd

Senpet Ltd

Futura Polyesters Ltd

13,8 %

13,8 %

4,43 %

0 %

South Asian Petrochem Ltd

13,9 %

All other companies

13,8 %

69,4

74,6

22,0

0,0

106,5

69,4

of

the

the basic

Community (2)

the anti-
In the original anti-dumping investigation,
dumping duty was adjusted in order
to avoid any
double-counting of the effects of benefits from export
subsidies.
In this regard, Article 14(1) of the Council
Regulation (EC) No 384/96 of 22 December 1995 on
protection against dumped imports from countries not
members
European
and
Article 24(1) of
anti-subsidy Regulation
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
It was found in the
dumping or export subsidisation.
in the
original anti-subsidy investigation as well as
present partial
the
interim review that
subsidy schemes investigated, which were found to be
countervailable, constituted export subsidies within the
meaning of Article 3(4)(a) of the basic anti-subsidy Regu­
lation. As such, these subsidies affected the export price
of the Indian exporting producers, thus leading to an
increased margin of dumping. In other words, the defi­
nitive dumping margins established in the original anti-
dumping investigation were partly due to the existence of
export subsidies.

certain of

(77) Any claim requesting the application of these individual
countervailing duty rates (e.g. following a change in the
name of the entity or following the setting up of new
production or sales entities) should be addressed to the
Commission (1) forthwith with all relevant information,
in particular any modification in the company’s activities
linked to production, domestic and export sales associ­
ated 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 Regu­
lation will be amended accordingly by updating the list
of companies benefiting from individual duty rates.

II. ANTI-DUMPING MEASURES

(78)

The amendment of the countervailing duty rate will have
an impact on the definitive anti-dumping duty imposed
on producers in India, by Regulation (EC) No 192/2007.

(80)

(81)

(82)

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 in the present partial
interim review to reflect
the actual dumping margin
remaining after the imposition of the adjusted definitive
countervailing duty offsetting the effect of the export
subsidies.

In other words, the new subsidy levels will have to be
taken into account
for the purpose of adjusting the
dumping margins, previously established.

The margins and duty rates applicable to the companies
concerned should therefore be calculated as indicated in
the table below.

Countervailing duty rate
(resulting from export
subsidies)

Injury elimination
level

Anti-dumping
duty rate

Proposed
anti-dumping duty
(EUR/tonne)

Reliance Industries Ltd

Pearl Engineering Polymers
Ltd

Senpet Ltd

Futura Polyesters Ltd

South Asian Petrochem Ltd

All other companies

13,8 %

13,8 %

4,43 %

0 %

13,9 %

13,8 %

44,3 %

33,6 %

44,3 %

44,3 %

44,3 %

44,3 %

30,5 %

16,2 %

39,9 %

14,7 %

11,6 %

30,5 %

153,6

87,5

200,9

161,2

88,9

153,6

(1) European Commission, Directorate-General for Trade, Directorate H,

N-105, B-1049 Brussels.

(2) OJ L 56, 6.3.1996, p. 1.

19.12.2008

EN

Official Journal of the European Union

L 340/11

(83)

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

HAS ADOPTED THIS REGULATION:

Article 1

Paragraph 2 of Article 1 of Regulation (EC) No 193/2007 shall be replaced by the following:

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

Country

Company

Countervailing duty
(EUR/tonne)

TARIC additional code

India

India

India

India

India

India

Reliance Industries Ltd

Pearl Engineering Polymers Ltd

Senpet Ltd

Futura Polyesters Ltd

South Asian Petrochem Ltd

All other companies

69,4

74,6

22,0

0,0

106,5

69,4

A181

A182

A183

A184

A585

A999’

Article 2

Paragraph 2 of Article 1 of Regulation (EC) No 192/2007 shall be replaced by the following:

‘2.
Except as provided for in Article 2, the rate of the anti-dumping duty applicable to the net, free-
at-Community-frontier price, before duty for products manufactured by the companies listed below
shall be as follows:

Country

Company

Anti-dumping duty
(EUR/tonne)

TARIC additional code

India

India

India

India

India

Reliance Industries Ltd

Pearl Engineering Polymers Ltd

Senpet Ltd

Futura Polyesters Ltd

South Asian Petrochem Ltd

153,6

87,5

200,9

161,2

88,9

A181

A182

A183

A184

A585

L 340/12

EN

Official Journal of the European Union

19.12.2008

Country

Company

Anti-dumping duty
(EUR/tonne)

TARIC additional code

India

Indonesia

Indonesia

Indonesia

Indonesia

Malaysia

Malaysia

All other companies

P.T. Mitsubishi Chemical
Indonesia

P.T. Indorama Synthetics Tbk

P.T. Polypet Karyapersada

All other companies

Hualon Corp. (M) Sdn. Bhd.

MpI Polyester Industries Sdn.
Bhd.

Malaysia

All other companies

Republic of Korea

SK Chemicals Group:

SK Chemicals Co. Ltd

Huvis Corp.

Republic of Korea

KP Chemical Group:

Honam Petrochemicals Corp.

KP Chemical Corp.

Republic of Korea

All other companies

Taiwan

Taiwan

Taiwan

Thailand

Thailand

Thailand

Far Eastern Textile Ltd

Shinkong Synthetic Fibers
Corp.

All other companies

Thai Shingkong Industry Corp.
Ltd

Indo Pet (Thailand) Ltd

All other companies

Article 3

153,6

187,7

92,1

178,9

187,7

36,0

160,1

160,1

0

0

0

0

148,3

36,3

67,0

143,4

83,2

83,2

83,2

A999

A191

A192

A193

A999

A186

A185

A999

A196

A196

A195

A195

A999

A808

A809

A999

A190

A468

A999’

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, 16 December 2008.

For the Council
The President

R. BACHELOT-NARQUIN