Proposal for a COUNCIL REGULATION imposing a definitive countervailing duty and collecting definitively the provisional duty imposed on imports of certain stainless steel bars originating in India
Date: 2011-03-28
Institutions: European Commission
Subjects: India, anti-dumping duty, bar, import, originating product, steel

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EUROPEAN COMMISSION 

Brussels, 28.3.2011 
COM(2011) 151 final 

2011/0063 (NLE) 

Proposal for a 

COUNCIL REGULATION 

imposing a definitive countervailing duty and collecting definitively the provisional duty 
imposed on imports of certain stainless steel bars originating in India 

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EXPLANATORY MEMORANDUM 

1. 

CONTEXT OF THE PROPOSAL 

•  Grounds for and objectives of the proposal 

This proposal concerns the application of Council Regulation (EC) No 597/2009 of 
11 June 2009 on protection against subsidised imports from countries not members 
of  the  European  Community  ('the  basic  Regulation')  in  the  anti-subsidy  proceeding 
concerning imports of certain stainless steel bars originating in India. 

•  General context 

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

•  Existing provisions in the area of the proposal 

Commission  Regulation  (EU)  No  1261/210  imposing  a  provisional  countervailing 
duty on imports of certain stainless steel bars originating in India. 

•  Consistency with other policies and objectives of the Union 

Not applicable. 

2. 

CONSULTATION OF INTERESTED PARTIES AND IMPACT 
ASSESSMENT 

•  Consultation of interested parties 

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

•  Collection and use of expertise 

There was no need for external expertise. 

•  Impact assessment 

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

The basic Regulation does not contain provisions for a general impact assessment but 
contains an exhaustive list of conditions that have to be assessed. 

3. 

LEGAL ELEMENTS OF THE PROPOSAL 

•  Summary of the proposed action 

The attached proposal for a Council Regulation is based on the definitive findings on 
subsidisation,  injury,  causation  and  Union  interest.  It  is  therefore  proposed  that  the 

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Council adopt the attached proposal for a Regulation which should be published no 
later than 29 April 2010. 

•  Legal basis 

Council  Regulation  (EC)  No  597/2009  of  11  June  2009  on  protection  against 
subsidised imports from countries not members of the European Community. 

•  Subsidiarity principle 

The  proposal  falls  under  the  exclusive  competence  of  the  European  Union.  The 
subsidiarity principle therefore does not apply. 

•  Proportionality principle 

The proposal complies with the proportionality principle for the following reasons: 

The form of action is described in the above-mentioned basic Regulation and leaves 
no scope for national decision. 

Indication  of  how  financial  and  administrative  burden  falling  upon  the  Union, 
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 for the following reason: 

Other means would not be adequate because the basic Regulation does not provide 
for alternative options. 

4. 

BUDGETARY IMPLICATION 

The proposal has no implication for the Union budget. 

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2011/0063 (NLE) 

Proposal for a 

COUNCIL REGULATION 

imposing a definitive countervailing duty and collecting definitively the provisional duty 
imposed on imports of certain stainless steel bars originating in India 

THE COUNCIL OF THE EUROPEAN UNION, 

Having regard to the Treaty on the Functioning of the European Union,  

Having  regard  to  Council  Regulation  (EC)  No  597/2009  of  11  June  2009  on  protection 
against  subsidised  imports  from  countries  not  members  of  the  European  Community1  (‘the 
basic Regulation’), and in particular Article 15 thereof, 

Having regard to the proposal submitted by the European Commission after having consulted 
the Advisory Committee, 

Whereas: 

1. 

PROCEDURE 

1.1. 

Provisional measures 

(1) 

(2) 

(3) 

The  Commission,  by  Regulation  (EU)  No  1261/20102  ('the  provisional  Regulation') 
imposed  a  provisional  countervailing  duty  on  imports  of  certain  stainless  steel  bars 
originating in India. 

The  proceeding  was  initiated  following  a  complaint  lodged  on  15  February  2010  by 
the European Federation of Iron and Steel Industries (Eurofer) ('the complainant') on 
behalf  of  producers  representing  a  major  proportion,  in  this  case  more  than  25%,  of 
total Union production of certain stainless steel bars.  

As set out in recital 23 of the provisional regulation, the investigation of subsidisation 
and  injury  covered  the  period  from  1  April  2009  to  31  March  2010  ('investigation 
period  of  'IP').  The  examination  of  the  trends  relevant  for  the  assessment  of  injury 
covered  the  period  from  2007  to  the  end  of  the  investigation  period  (period 
considered). 

1.2. 

Subsequent procedure 

(4) 

Subsequent to the disclosure of the essential facts and considerations on the basis of 
which  it  was  decided  to  impose  provisional  countervailing  measures  ('provisional 

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OJ L 188, 18.7.2009, p. 93. 
OJ L 343, 29.12.2010, p. 57. 

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disclosure'),  several  interested  parties  made  written  submissions  making  their  views 
known  on  the  provisional  findings.  The  parties  who  so  requested  were  granted  the 
opportunity  to  be  heard.  The  Commission  continued  to  seek  information  it  deemed 
necessary for its definitive findings. The oral and written comments submitted by the 
interested parties were considered and taken into account, where appropriate.  

(5) 

All  parties  were  informed  of  the  essential  facts  and  considerations  on  the  basis  of 
which it was intended to recommend the imposition of a definitive countervailing duty 
on  imports  of  certain  stainless  steel  bars  originating  in  India  and  the  definitive 
collection  of  the  amounts  secured  by  way  of  the  provisional  duty.  The  parties  were 
also granted a period within which they could make representations subsequent to this 
final disclosure. 

1.3. 

Parties concerned by the proceeding 

(6) 

In the absence of any comments concerning the parties concerned by the proceeding, 
recitals (5) to (22) of the provisional Regulation are hereby confirmed. 

2. 

PRODUCT CONCERNED AND THE LIKE PRODUCT 

2.1. 

Product concerned 

(7) 

(8) 

(9) 

It  is  recalled  that,  as  stated  in  recital  (24)  of  the  provisional  Regulation,  the  product 
concerned was defined as stainless steel bars and rods, not further worked than cold-
formed  or  cold-finished,  other  than  bars  and  rods  of  circular  cross-section  of  a 
diameter  of  80  mm  or  more,  originating  in  India  ('the  product  concerned')  currently 
falling within CN codes 7222 20 21, 7222 20 29, 7222 20 31, 7222 20 39, 7222 20 81 
and 7222 20 89. 

One  exporting  producer  in  India  claimed  that  SSB  of  a  circular  cross  section  of  a 
diameter of less than 80 mm but outside the tolerance range of H6 to H11 should be 
excluded from the investigation because it does not fall within the product scope. 

This argument was rejected since the product scope does not refer to tolerances. The 
Product Control Number (PCN) in the questionnaire does contain a field for tolerances 
limited  to  range  H6  to  H11  but  this  is  only  for  comparison  purposes  and  has  no 
binding  consequences  for  the  product  under  investigation.  It  is  therefore  concluded 
that products outside the tolerance range of H6 to H11 should not be excluded. 

(10) 

It  should  be  noted  that  for  the  calculation  of  the  provisional  subsidy-  and  injury 
margins,  the  products  outside  the  tolerance  range  of  H6  to  H11  were  taken  into 
account.  

2.2. 

Like product 

(11) 

In  the  absence  of  any  comments  concerning  the  like  product,  recital  (25)  of  the 
provision Regulation is hereby confirmed. 

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3. 

SUBSIDISATION 

3.1. 

Introduction 

(12) 

In  recital  (26)  of  the  provisional  Regulation,  reference  was  made  to  the  following 
schemes, which allegedly involve the granting of subsidies: 

(a)  Duty Entitlement Passbook Scheme; 

(b)  Advance Authorisation Scheme; 

(c)  Export Promotion Capital Goods Scheme; 

(d)  Export Oriented Units Scheme; 

(e)  Export Credit Scheme. 

(13)  The Union industry questioned whether the Commission failed to take into account a 
number  of  subsidy  schemes,  and  as  a  result  believed  that  the  subsidies  found  to  be 
received by Indian producers were underestimated. 

(14) 

In reply to this, it should be noted that that the complaint contained a great number of 
national  and  local  subsidy  schemes,  which  were  included  in  the  questionnaire  to 
exporting producers in India and investigated by the Commission. However, only for 
the  schemes  listed  in  recital  (12)  above,  it  was  found  that  the  investigated  exporting 
producers in the sample had received subsidies.  

(15)  The  EU  industry  also  argued  that  the  Commission  findings  contradict  a  US  DOC 
(Department of Commence) finding in a recent countervailing proceedings concerning 
certain steel exports from India where much higher subsidies were found. However, it 
should  be  noted  that  this  finding  relates  to  a  different  product  and  cover  a  different 
investigation period. Consequently, this argument is rejected. 

(16) 

In  the  absence  of  any  other  comments,  recitals  (26)  to  (28)  of  the  provisional 
Regulation are hereby confirmed.  

3.2. 

Duty Entitlement Passbook Scheme (‘DEPBS’) 

(17)  Several parties argued that the DEPBS should not be considered as a countervailable 
subsidy,  since  the  purpose  of  the  scheme  is  to  offset  customs  duties  on  imports.  As 
explained  in  recital  (38)  of  the  provisional  Regulation  this  scheme  cannot  be 
considered  a  permissible  duty  drawback  system  or  substitution  drawback  system 
within  the  meaning  of  Article  3(1)(a)(ii)  of  the  basic  Regulation  since  it  does  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.  In  particular,  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 

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inputs  at  all.  In  order  to  obtain  the  benefit,  it  is  sufficient  for  an  exporter  to  simply 
export goods without demonstrating that any input material was imported. Thus, even 
exporters which procure all of their inputs locally and do not import any goods which 
can  be  used  as  inputs  are  still  entitled  to  benefit  from  the  DEPBS.  Therefore,  these 
arguments are rejected. 

(18) 

In case of sales of the DEPB license, one party argued that the actual selling price was 
below the license value and therefore the benefit was less. In this regard, it should be 
noted that the benefit under this scheme was calculated on the basis of the amount of 
credit  granted  in  the  license  regardless  of  whether  the  license  was  used  to  offset 
customs  duties  on  imports  or  whether  the  license  was  actually  sold.  It  is  considered 
that any sale of a license at a price less the face value is a pure commercial decision 
which does not alter the amount of benefit received under this scheme. Therefore, this 
argument is rejected 

(19)  One party further argued that even if the DEPBS was considered countervailable, the 
benefit received under the scheme should not be based on export value, but rather the 
actual use of the DEPB license. In this respect, it should be recalled that in accordance 
with  Articles  3(2)  and  5  of  the  basic  Regulation,  the  amount  of  countervailable 
subsidies was calculated in terms of benefit conferred on the recipient, which is found 
to exist during the IP. In this regard, it was considered that the benefit is conferred on 
the  recipient  at  the  point  of  time  when  an  export  transaction  is  made  under  this 
scheme.  At  that  moment,  the  Government  of  India  (GOI)  is  liable  to  forego  the 
customs  duties,  which  constitutes  a  financial  contribution  within  the  meaning  of 
Article  3(1)(a)(i)  of  the  basic  Regulation.  Once  the  customs  authorities  issues  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. By virtue of the fact that a company is aware that it will receive a 
subsidy under DEPBS, the company is in a more advantageous position, because it can 
reflect the subsidies through offering lower prices. The moment of export is decisive 
in  order  to  establish  conferral  of  a  benefit,  not  the  subsequent  usage,  because  an 
exporter already with such vested right is 'better off' in financial terms. Consequently, 
this claim was rejected. 

(20) 

In the absence of any other comments concerning this scheme, recitals (29) to (41) of 
the provisional Regulation are hereby confirmed 

3.3. 

Advance Authorisation Scheme ('AAS') 

(21)  One  party  argued  that  the  AAS  should  be  considered  as  a  duty  drawback  system, 
because  the  imported  materials  are  used  to  produce  exported  goods.  In  reply  to  this 
argument, it was explained in recital (54) of the provisional Regulation that the sub-
scheme  used  in  the  present  case  cannot  be  considered  permissible  duty  drawback 
system or substitution drawback system within the meaning of Article 3(1)(a)(ii) of the 
basic  Regulation.  It  does  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  a 
verification  system  or  a  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). It is also considered that the SIONs for the product concerned were 

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not sufficiently precise and that themselves cannot constitute a verification system of 
actual  consumption  because  the  design  of  those  standard  norms  does  not  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 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).  The  sub-scheme  is  therefore  countervailable,  and 
the argument is hereby rejected. 

(22)  Regarding  the  calculation  of  the  subsidy  amount,  and  contrary  to  the  submission  by 
one  party,  AAS  benefit  generated  by  other  than  the  product  concerned  had  to  be 
considered  when  establishing  the  amount  of  countervailable  benefit.  No  obligation 
exists  under  AAS  which  limits  the  use  of  the  benefit  to  the  importation  of  duty-free 
input material linked to a particular product. Consequently, the product concerned can 
benefit from all AAS benefit generated. 

(23) 

In the absence of any other comments concerning this scheme, recitals (42) to (58) of 
the provisional Regulation are hereby confirmed 

3.4. 

Export Promotion Capital Goods Scheme (‘EPCGS’)  

(24) 

In the absence of any comments concerning this scheme, recital (59) of the provisional 
Regulation is hereby confirmed. 

3.5. 

Export Oriented Units Scheme (‘EOUS’) 

(25)  Before addressing a number of comments from the company in the sample which had 
the status of an EOU, it should be recalled that a crucial obligation of an EOU as set 
out  in  the  FT-policy  2004-2009  and  FT-policy  2009-2014  is  to  achieve  net  foreign 
exchange  (‘NFE’)  earnings,  that  is  in  a  reference  period  (5  years)  the  total  value  of 
exports has to be higher than the total value of imported goods. All enterprises which, 
in  principle,  undertake  to  export  their  entire  production  of  goods  or  services  may  be 
set up under the EOUS.  

(26) 

In  return,  export  oriented  units  are  entitled  to  a  number  of  concessions  listed  under 
recital  (66)  of  the  provisional  Regulation.  They  are  contingent  in  law  upon  export 
performance,  and  therefore  deemed  to  be  specific  and  countervailable  under  Article 
4(4), first subparagraph, point (a) of the basic Regulation. The export objective of an 
EOU as set out in chapter 6.1 of the FT-policy 2009-2014 is a conditio sine qua non to 
obtain the subsidies. 

(27)  The  exemptions  an  EOU  enjoys  are  all  contingent  in  law  upon  export  performance. 
The  EOUS  cannot  be  considered  as  a  permissible  duty  drawback  system  or 
substitution  drawback  system  within  the  meaning  of  Article  3(1)(a)(ii)  of  the  basic 
Regulation. It does not conform to the strict rules laid down in Annex I (items (H) and 
(i),  Annex  II  (definition  and  rules  for  drawback)  and  Annex  III  (definition  and  rules 
for substitution drawback) to the basic Regulation. 

(28) 

In  addition,  it  has  not  been  confirmed  that  the  GOI  has  a  verification  system  or 
procedure in place to confirm whether and in what amounts duty and or sales tax free 
procured  inputs  were  consumed  in  the  production  of  the  exported  product  (Annex 
II(II)(4)  to  the  basic  Regulation  and,  in  the  case  of  substitution  drawback  schemes, 

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Annex  III(II)(2)  to  the  basic  Regulation.  The  verification  system  in  place  aims  at 
monitoring the NFE earning obligation and not the consumption of imports in relation 
to the production of exported goods. 

(29) 

In the view of the party with the status of an EOU, countervailability of any benefit is 
subject to two conditions: (i) lack of a verification system; and (ii) that there is excess 
remission. In reply to this, it should be noted that it is vital for the GOI to demonstrate 
that  it  has  put  in  place  a  proper  verification  system  to  determine  which  inputs  were 
consumed  in  the  production  process  and  in  what  amounts.  The  lack  of  a  proper 
verification  system  will  be  further  addressed  below.  Regarding  the  issue  of  excess 
remission, this is only relevant in a case where it has determined that a scheme, in this 
cases the EOUS, is a bona fide duty drawback scheme which fulfils the requirements 
of  Annex  I,  II  and  III  of  the  basic  Regulation.  As  already  explained  in  recital  (27) 
above,  the  EOUS  cannot  be  considered  as  a  permissible  duty  drawback  system  or 
substitution  drawback  system  within  the  meaning  of  Article  3(1)(a)(ii)  of  the  basic 
Regulation.  

(30)  The  party  further  underlined  the  default  character  of  the  EOU  system  as  one  that 
allows duty-free imports of raw material for exports of finals goods. The party argued 
that the EOU system may be assimilated with the special customs procedure of inward 
processing  relief,  not  duty  drawback.  It  claimed  that  irrespective  of  whether  the 
outcome  of  these  two  systems  is  theoretically  the  same  (export  of  goods  that 
incorporate  raw  materials  for  which  duty  upon  importation  is  foregone),  there  are 
substantial differences between them. In support for the claim, the party argued that in 
a  duty  drawback  system,  the  exporter  has  the  right  to  claim  the  refund  or  duties  for 
raw  material  incorporated  in  the  final  goods.  In  the  inward  processing  system,  the 
exporter is exempted from any import duty but has the legal obligation to pay duty for 
any  final  goods  sold  domestically.  The  party  argued  that  there  cannot  be  any  excess 
remission under the latter system. 

(31) 

In reply to this, it should first of all be noted that it can only be determined whether 
excess payment has taken place in cases where there is a verification system in place 
aiming to monitor the consumption of imports in relation to the production of exported 
goods.  Regarding  the  party's  claim  that  the  EOU  is  not  a  duty  drawback  scheme,  it 
should be noted that footnote 2 to Annex I of  the  basic  Regulation clearly stipulates 
that  for  the  purpose  of  this  Regulation  'remission  or  drawback'  includes  the  full  or 
partial  exemption  or  deferral  of  import  charges.  It  should  be  clear  that  the  basic 
concept applying to duty drawback refund or exemption schemes are the same, i.e. that 
import duties on imports of raw materials are either not payable or refundable on the 
condition that such raw materials are used in the manufacture of products, which are 
consequently  exported.  Finally,  it  should  be  clear  that  in  order  to  determine  whether 
the EOUS is to be considered as a bona fide duty drawback scheme, it has to meet the 
requirements of Annex I, II and III of the basic Regulation.  

(32)  The party further claimed that an EOU is subject to a proper verification system and 
further verification steps regarding both its export and domestic sales. In claimed that 
not  only  the  Foreign  Trade  Policy  ('FTP')  and  the  Handbook  of  Procedure  ('HOP'), 
which  establishes  the  laws  and  procedures  to  EOU,  were  relevant.  It  should  also  be 
investigated  whether  there  are  other  Indian  laws  and  Regulations  in  place  which 
establish  a  reasonable  and  effective  verification  system.  In  support  for  its  claim,  the 
party  argued  that  according  to  Section  6.10.1  of  the  HOP,  it  is  legally  obliged  to 

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maintain proper accounts and shall file digitally-signed quarterly and annual progress 
reports concerning imports, domestic purchases, export and domestic sales. The party 
further argued that, according to the Central Excise Act, 1944, when making domestic 
sales, it is under the legal obligation to issue a tax invoice on which, for example, the 
payable  taxes  clearly  are  indicated.  The  Central  Excise  Act  also  establishes  monthly 
requirements according to which the party must submit to the authorities full details of 
its domestic sales. Also, under the Companies Act, 1956 and the applicable accounting 
standards, the party is legally obliged to provide detailed information on imports and 
domestic  procurement,  as  well  as  export  and  domestic  sales  in  its  audited  financial 
statements. 

(33) 

In reply to this, it is not disputed that the Companies Act may provide the framework 
for accounting standards in India. However, when accessing the countervailability of 
the EOU, the  relevant  issue is whether the  Government has  a  system in place which 
can confirm whether and in what amounts inputs free of duty or tax were consumed in 
the production of the exported goods. 

(34)  The requirements under the Central Excise Act serve a completely different purpose, 
i.e. to ensure that applicable taxes are paid in case of sales on the domestic market in 
India. It does not verify the duty-free imported materials, and it does not control the 
nexus  between  duty-free  inputs  and  resultant  export  products  in  order  to  qualify  as 
duty drawback schemes. 

(35)  Concerning  further  verification  steps  installed,  it  should  be  recalled,  as  mentioned 
under  recital  (69)  of  the  provisional  Regulation,  that  an  EOU  is  at  no  point  in  time 
required  to  co-relate  every  import  consignments  with  the  destination  of  the 
corresponding  resulting  product.  Only  such  consignment  controls,  however,  would 
provide the Indian authorities with sufficient information with the final destination of 
inputs  to  check  that  duty/sales  tax  exemptions  do  not  exceed  inputs  for  export 
production. 

(36)  Consequently, despite careful considerations of the submission made by this party, it 
was confirmed that the GOI has no effective verification system or procedure in place 
to confirm whether and in what amounts duty and sales 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. Also the GOI did not carry out a further examination based on actual 
inputs  involved,  although  this  would  be  normally  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  that  no  excess 
remission took place. 

(37)  The  party  argued  that  for  the  purpose  of  the  subsidy  calculation  the  Commission 
should  have  taken  into  account  customs  duties  paid  on  domestic  sales  of  finished 
products.  In  reply  to  this  argument,  it  should  be  noted  that  though  the  purpose  for 
setting up an EOU unit is to achieve NFE earning, the EOU unit has the possibility to 
sell part of its production on the domestic market. Under the EOUS, the goods will be 
treated as imported goods though only a concessional duty rate of 50% has to be paid. 
As such, an EOU 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 

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goods for consumption on the domestic market does not mean that the exemption of an 
EOU  unit  from  import  duties  and  reimbursement  of  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. 

(38)  The  party  also  argued  that  the  Commission  uses  the  wrong  denominator  when 
calculating  the  subsidy  amount.  It  claimed  that  the  correct  denominator  is  the  entire 
sales  turnover  and  not  the  export  sales  turnover.  This  claim  has  to  be  rejected.  In 
accordance with Article 7(2) of the basic Regulation, the subsidy amount (numerator) 
calculated under the scheme was allocated over total export turnover during the IP as 
appropriate denominator because the subsidy is contingent upon export performance. 
The possibility for an EOU to sell part of its production on the domestic market does 
not alter the fact that EOUS has a clear export objective. 

(39)  Lastly, the party argued that the benefit conferred upon the company should be equal 
to  the  credit  costs  foregone  by  the  GOI  between  the  time  the  raw  materials  are 
imported and the final stainless steel bars are  exported  from  India.  In  support  for  its 
claim,  the  party  referred  to  a  recent  preliminary  finding  of  the  US  Department  of 
Commerce  (DOC)  in  an  anti-subsidy  new  shipper  review  where  unpaid  duties  were 
considered to be interest-free loan made to the company at the time of the importation. 
In  reply  to  this,  it  is  noted  that  the  Commission  is  not  bound  by  any  calculation 
methodology applied by the DOC but by the provisions of the basic Regulation. In the 
present case, the calculation methodology used is explained in recitals (75) and (76) of 
the provisional Regulation. In any event, this argument would only work if the duties 
were  merely  deferred  (Footnote  3  to  Annex  I  of  the  Basic  regulation)  rather  than 
exempted, as is the case here.  

(40) 

In the light of the above, recitals (60) to (77) of the provisional Regulation are hereby 
confirmed. 

3.6. 

Export Credit Scheme (‘ECS’)  

(41)  One  party  acknowledged  that  it  had  received  a  preferential  credit  for  it's  export  but 
argued that this rate was considerably higher than the prevailing credit rates in the EU 
and therefore should not be considered as a benefit. 

(42) 

In reply to this, it should be noted that the subsidy amount was calculated on the basis 
of  the  difference  between  the  interest  paid  for  export  credits  and  the  amount  that 
would  have  been  payable  for  ordinary  commercial  credits  used  by  the  company 
concerned  in  India.  In  this  case,  a  domestic  benchmark  was  used  to  calculate  the 
amount of subsidy. Therefore, this argument is rejected. 

(43) 

In the absence of any other comments concerning this scheme, recitals (78) to (86) of 
the provisional Regulation are hereby confirmed. 

3.4. 

Amount of countervailable subsidies 

(44)  The amount of countervailable subsidies in accordance with the provisions of the basic 
Regulation, expressed ad valorem, ranges from 3,3% to 4,3%. As these are at the same 
level  as  set  out  in  recital  (87)  of  the  provisional  Regulation,  that  recital  is  therefore 
confirmed. 

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SCHEME→ 

DEPBS(*) AAS(*) 

EOU(*) ECS(*) 

Total 

COMPANY 

Chandan Steel Ltd. 

1,5% 

1,5% 

0,4% 

3,4% 

Venus group 

2,6% to 
3,4%  

0 to 0,8% 

Viraj Profiles Vpl. Ltd. 

4,3% 

(*) Subsidies marked with an asterisk are export subsidies 

(**) Weighted average for the Group 

3,3%(**)

4,3% 

(45)  The  methodology  for  establishing  the  subsidy  margin  for  the  cooperating  companies 
not included in the sample was set out in recital (88) of the provisional Regulation. In 
line with Article 15(3) of the basic Regulation, the subsidy margin for the cooperating 
companies not included in the sample, calculated on the basis of the weighted average 
subsidy  margin  established  for  the  cooperating  companies  in  the  sample,  is  4,0%. 
Hence, recital (88) of the provisional Regulation is confirmed. 

(46)  The basis for establishing the country-wide subsidy margin was set out in recital (89) 
of the provisional Regulation. In  the  absence  of  any  comments in this regard, recital 
(89) of the provisional Regulation is hereby confirmed.  

4. 

UNION INDUSTRY 

(47) 

In the absence of any comments concerning Union industry, recitals (90) to (93) of the 
provisional Regulation are hereby confirmed. 

5. 

INJURY 

(48) 

In  the  absence  of  any  comments  concerning  injury,  recitals  (94)  to  (122)  of  the 
provisional Regulation are hereby confirmed. 

6. 

CAUSATION 

(49) 

In  the  absence  of  any  comments  concerning  causation,  recitals  (123)  to  (136)  of  the 
provisional Regulation are hereby confirmed. 

7. 

UNION INTEREST 

(50) 

In the absence of any comments concerning Union interest, the conclusions in recitals 
(137) to (148) of the provisional Regulation are hereby confirmed. 

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8. 

DEFINITIVE COUNTERVAILING MEASURES 

8.1. 

Injury elimination level 

(51)  One party claimed that the average pre-tax profit margin of 9,5%, which was based on 
the situation in the year 2007, used to calculate the non-injurious price to establish the 
injury margin was not representative for the industry's long term pre-tax profit margin. 
It was argued that the year on which this profit was based counted as an exceptional 
year  and  that  the  years  2005-2006  would  be  more  representative  since  these  were 
normal business years with profit margins ranging from 4 to 6 %. 

(52)  The  target  profit  used  at  provisional  stage  was  based  on  the  weighted  average  profit 
margin realised by the sampled Union producers in 2007. This year was considered to 
be the most recent representative year when the Union producers did not suffer from 
injurious  subsidisation.  The  comment  is  therefore  rejected,  the  profit  margin  used  at 
provisional stage is hereby confirmed. 

(53) 

In the absence of other comments received concerning the injury elimination level, the 
recitals (149) to (153) of the provisional Regulation are hereby confirmed. 

8.2. 

Conclusion on injury elimination level 

(54)  The methodology used in the provisional Regulation is hereby confirmed.  

8.3. 

Level of the duties 

(55) 

In  the  light  of  the  foregoing  and  in  accordance  with  Article  15(1)  of  the  basic 
Regulation, a definitive countervailing duty should be imposed at a level sufficient to 
eliminate  the  injury  caused  by  the  subsidised  imports  without  exceeding  the  subsidy 
margin found. 

(56)  On the basis of the above, the countervailing duty rates were established by comparing 
the  injury  elimination  margins  and  the  subsidy  margins.  Consequently,  the  proposed 
countervailing duty rates are as follows: 

Company 

Chandan Steel Ltd. 

Venus group 

Viraj Profiles Vpl. Ltd. 

Cooperating non-sampled companies 

All other companies  

Subsidy 
margin 

Injury 
margin 

Countervailing 
duty rate 

3,4% 

3,3% 

4,3% 

4,0% 

4,3% 

28,6% 

45,9% 

51,5% 

44,4% 

51,5% 

3,4% 

3,3% 

4,3% 

4,0% 

4,3% 

(57)  The  individual  company  countervailing  duty  rates  specified  in  this  Regulation  were 
established  on  the  basis  of  the  findings  of  the  present  investigation.  Therefore,  they 
reflect  the  situation  found  during  that  investigation  with  respect  to  these  companies. 
These  duty  rates  (as  opposed  to  the  country-wide  duty  applicable  to  'all  other 
companies') are thus exclusively applicable to imports of products originating in India 
and  produced  by  the  companies  and  thus  by  the  specific  legal  entities  mentioned. 
Imported products produced by any other company not specifically mentioned in the 

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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'. 

(58)  Any  claim  requesting  the  application  of  an  individual  company  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  Commission3  forthwith 
with all relevant information, in particular any modification in the company's activities 
linked  to  production,  domestic  and  export  sales  associated  with,  for  example,  that 
name  change  or  that  change  in  the  production  and  sales  entities.  If  appropriate,  the 
Regulation will accordingly be amended by updating the list of companies benefiting 
from individual duty rates. 

8.4. 

Definitive collection of provisional duties 

(59) 

In view of the magnitude of the subsidy margins found and in the light of the level of 
the  injury  caused  to  the  Union  industry,  it  is  considered  necessary  that  the  amounts 
secured  by  way  of  the  provisional  countervailing  duty,  imposed  by  the  provisional 
Regulation be definitively collected.  

HAS ADOPTED THIS REGULATION: 

Article 1 

1. 

2. 

A definitive countervailing duty is hereby imposed on imports of stainless steel bars 
and rods, not further worked than cold-formed or cold-finished, other than bars and 
rods  of  circular  cross-section  of  a  diameter  of  80  mm  or  more,  currently  falling 
within CN codes 7222 20 21, 7222 20 29, 7222 20 31, 7222 20 39, 7222 20 81 and 
7222 20 89 and originating in India. 

The  rate  of  the  definitive  countervailing  duty  applicable  to  the  net,  free-at-Union-
frontier price, before duty, of the product described in paragraph 1 and manufactured 
by the companies below shall be: 

3 

European Commission, Directorate-General for Trade, Directorate H, 1049 Brussels, Belgium. 

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Company 

Duty (%) TARIC additional code

Chandan Steel Ltd., Mumbai 

Venus Wire Industries Pvt. Ltd, Mumbai;  
Precision Metals, Mumbai;  
Hindustan Inox Ltd., Mumbai;  

Sieves Manufacturer India Pvt. Ltd., Mumbai

Viraj Profiles Vpl. Ltd., Thane 

Companies listed in the Annex 

All other companies 

3,4 

3,3 

4,3 

4,0 

4,3 

B002 

B003 

B004 

B005 

B999 

3. 

1. 

Unless  otherwise  specified,  the  provisions  in  force  concerning  customs  duties  shall 
apply. 

Article 2 

Amounts secured by way of provisional countervailing duties pursuant to Regulation 
(EU) No  1261/2010  on  imports of  stainless steel  bars and  rods, not further worked 
than cold-formed or cold-finished, other than bars and rods of circular cross-section 
of a diameter of 80 mm or more, currently falling within CN codes 7222 20 21, 7222 
20 29, 7222 20 31, 7222 20 39, 7222 20 81 and 7222 20 89, and originating in India, 
shall be definitively collected. 

This  Regulation  shall  enter  into  force  on  the  day  following  that  of  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 

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ANNEX: Indian cooperating exporting producers not sampled 

TARIC Additional Code B005 

Company name 
Ambica Steel Ltd. 
Bhansali Bright Bars Pvt. Ltd. 
Chase Bright Steel Ltd. 
D.H. Exports Pvt. Ltd. 
Facor Steels Ltd. 
Global smelters Ltd. 
Indian Steel Works Ltd. 
Jyoti Steel Industries Ltd. 
Laxcon Steels Ltd. 
Meltroll Engineering Pvt. Ltd. 
Mukand Ltd. 
Nevatia Steel & Alloys Pvt. Ltd. 
Panchmahal Steel Ltd. 
Raajratna Metal Industries Ltd. 
Rimjhim Ispat Ltd. 
Sindia Steels Ltd. 
SKM Steels Ltd. 
Parekh Bright Bars Pvt. Ltd. 
Shah Alloys Ltd. 

City 
New-Delhi 
Navi-Mumbai 
Navi-Mumbai 
Mumbai 
Nagpur 
Kanpur 
Navi-Mumbai 
Mumbai 
Ahmedabad 
Mumbai 
Thane 
Mumbai 
Kalol 
Ahmedabad 
Kanpur 
Mumbai 
Mumbai 
Thane 
Gandhinagar 

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