Proposal for a COUNCIL REGULATION terminating the partial interim review concerning the countervailing measures on imports of certain polyethylene terephthalate (PET) originating in, inter alia, India
Date: 2012-05-25
Institutions: European Commission
Subjects: India, anti-dumping duty, countervailing charge, import (EU), originating product, plastics

EUROPEAN COMMISSION 

Brussels, 25.5.2012  
COM(2012) 237 final 

2012/0121 (NLE) 

Proposal for a 

COUNCIL REGULATION 

terminating the partial interim review concerning the countervailing measures on 
imports of certain polyethylene terephthalate (PET) originating in, inter alia, 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  proceeding  concerning 
imports of certain polyethylene terephthalate (PET) originating, inter alia, 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 

Definitive measures are in force and were imposed by Council Regulation (EC) No 
1645/2005 of 6 October 2005 amending Regulation (EC) No 2603/2000 imposing a 
definitive countervailing duty on imports of certain polyethylene terephthalate (PET) 
originating, inter alia, 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. 

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3. 

LEGAL ELEMENTS OF THE PROPOSAL 

•  Summary of the proposed action 

On  2  April  2011  the  Commission  initiated  a  partial  interim  review  concerning 
imports of certain polyethylene terephthalate (PET) originating, inter alia, in India. 

The  attached  proposal  for  a  Council  Regulation  is  based  on  the  findings  of  the 
investigation carried out which is limited in scope to the examination of subsidisation 
and as far as the applicant is concerned.  

The  investigation  found  that  the  level  of  subsidisation  was  lower  than  in  the  last 
investigation,  but  that  the  changed  circumstances  leading  to  the  reduced  subsidy 
margin are not of a lasting nature 

It is therefore proposed that the Council adopt the attached proposal for a termination 
Regulation which should be published no later than 1 July 2012. 

•  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 instrument: regulation. 

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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2012/0121 (NLE) 

Proposal for a 

COUNCIL REGULATION 

terminating the partial interim review concerning the countervailing measures on 
imports of certain polyethylene terephthalate (PET) originating in, inter alia, 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 Articles 19 and 24 thereof, 

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

Whereas: 

1. 

PROCEDURE 

1.1. 

Previous investigation and existing countervailing measures 

(1) 

By Regulation (EC) No 2603/20002, the Council imposed a definitive countervailing 
duty  on  imports  of  polyethylene  terephthalate  (PET)  originating,  inter  alia,  in  India 
('the original anti-subsidy investigation'). The definitive findings and conclusions of an 
accelerated review pursuant to Article 20 of the basic Regulation are set out in Council 
Regulation  (EC)  No  1645/20053.  Following  an  expiry  review,  the  Council,  by 
Regulation (EC) No 193/20074, imposed a definitive countervailing duty for a further 
period of 5 years. The countervailing measures were amended by Council Regulation 
(EC) No 1286/20085 following a partial interim review ('the last review investigation'). 
The  countervailing  measures  consist  of  a  specific  duty.  The  rate  of  the  duty  ranges 
between  EUR  0  and  EUR  106,5  per  tonne  for  individually  named  Indian  producers 
with  a  residual  duty  rate  of  EUR  69,4  per  tonne  imposed  on  imports  from  all  other 
producers. 

(2) 

Following  a  name  change  of  one  Indian  company,  South  Asian  Petrochem  Ltd,  by 
Notice  (EC)  No  2010/C  335/076,  the  Commission  concluded  that  the  anti-subsidy 

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4 
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OJ L 188, 18.7.2009, p. 93. 
OJ L 301, 30.11.2000, p. 1. 
OJ L 266, 11.10.2005, p. 1. 
OJ L 59, 27.2.2007, p. 34. 
OJ L 340, 19.12.2008, p. 1. 
OJ C 335, 11.12.2010, p. 7. 

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findings in respect of South Asian Petrochem Ltd should apply to Dhunseri Petrochem 
& Tea Limited. 

1.2. 

Existing anti-dumping measures 

(3) 

(4) 

(5) 

By  Regulation  (EC)  No  2604/20007,  the  Council  imposed  a  definitive  anti-dumping 
duty  on  imports  of  PET  originating,  inter  alia,  in  India  ('the  original  anti-dumping 
investigation').  A  review  pursuant  to  Article  11(4)  (‘the  new  exporter  review‘)  of 
Council  Regulation  (EC)  No 1225/20098  ('the  basic  anti-dumping  Regulation') 
concerning South Asian Petrochem Ltd was subsequently conducted and its definitive 
findings  and  conclusions  are  set  out  in  Council  Regulation  (EC)  No  1646/20059. 
Following an expiry review, the Council, by Regulation (EC) No 192/200710, imposed 
a  definitive  anti-dumping  duty  for  a  further  period  of  five  years.  The  anti-dumping 
measures  were  amended  by  Council  Regulation  (EC)  No  1286/2008  following  a 
partial interim review investigation (‘the last anti-dumping review investigation’). The 
measures were set at the level of the injury elimination and consisted of specific anti-
dumping  duties.  The  rate  of  the  duty  ranges  between  EUR  87,5  and  EUR  200,9  per 
tonne for individually named Indian producers with a residual duty rate of EUR 153,6 
per  tonne  imposed  on  imports  from  all  other  producers  (‘the  current  anit-dumping 
duties’). 

Following  a  name  change  of  one  Indian  company,  South  Asian  Petrochem  Ltd,  by 
Notice  (EC)  No  2010/C  335/0611,  the  Commission  concluded  that  the  anti-dumping 
findings in respect of South Asian Petrochem Ltd should apply to Dhunseri Petrochem 
& Tea Limited. 

By Decision 2005/697/EC12 the Commission accepted undertakings offered by South 
Asian  Petrochem  Ltd  setting  a  minimum  import  price  ('MIP')  (‘the  undertaking’). 
Following  a  name  change,  the  Commission  concluded  by  Notice  (EC)  No  2010/C 
335/05  that  the  undertaking  offered  by  South  Asian  Petrochem  Ltd  should  apply  to 
Dhunseri Petrochem & Tea Limited. 

1.3. 

Initiation of a partial interim review 

(6) 

A  request  for  a  partial  interim  review  pursuant  to  Article  19  of  the  basic  Regulation 
was  lodged  by  Dhunseri  Petrochem  &  Tea  Limited, an Indian exporting producer of 
PET  ('the  applicant').  The  request  was  limited  in  scope  to  subsidisation  and  to  the 
applicant. The applicant at the same time also requested the review of the current anti-
dumping measures. The residual anti-dumping and countervailing duties are applicable 
to  imports  of  products  produced  by  the  applicant  and  sales  of  the  applicant  to  the 
Union are covered by the undertaking. 

(7) 

The  applicant  provided  prima  facie  evidence  that  the  continued  application  of  the 
measure  at  its  current  level  was  no  longer  necessary  to  offset  the  countervailable 
subsidisation. In particular, the applicant provided prima facie evidence showing that 

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OJ L 301, 30.11.2000, p. 21. 
OJ L 343, 22.12.2009, p. 51.  
OJ L 266, 11.10.2005, p. 10. 
OJ L 59, 27.2.2007, p. 1. 
OJ C 335, 11.12.2010, p. 6. 
OJ L 266, 11.10.2005, p. 62. 

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its  subsidy  amount  has  decreased  well  below  the  duty  rate  currently  applicable  to  it. 
This reduction in the overall subsidy level would mainly be due to the termination of 
its Export Oriented Unit ('EOU') status. With a magnitude of 13,5%, the EOU scheme 
accounted  for  the  vast  majority  of  the  13,9%  subsidies  established  during  the 
accelerated review. 

(8) 

Having  determined,  after  consulting  the  Advisory  Committee,  that  the  request 
contained sufficient prima facie evidence, the Commission announced on 2 April 2011 
the initiation of a partial interim review ('the present review') pursuant to Article 19 of 
the basic Regulation by a notice of initiation published in the Official Journal of the 
European  Union13.  The  review  was  limited  in  scope  to  the  examination  of 
subsidisation in respect of the applicant. 

1.4. 

Parties concerned by the investigation 

(9) 

The Commission officially informed the applicant, the representatives of the exporting 
country  and  the  association  of  Union  producers  about  the  initiation  of  the  review. 
Interested  parties  were  given  the  opportunity  to  make  their  views  known  in  writing 
and to request a hearing within the time limit set in the notice of initiation. 

(10)  One interested party requested and was granted a hearing.  

(11) 

In  order  to  obtain  the  information  deemed  necessary  for  its  investigation,  the 
Commission sent a questionnaire to the applicant and the government of India ('GOI') 
and received replies within the deadline set for that purpose. 

(12)  The  Commission  sought  and  verified  all  information  deemed  necessary  for  the 
determination  of  subsidisation.  The  Commission  carried  out  verification  visits  at  the 
premises  of  the  applicant  in  Kolkata,  India  and  at  the  premises  of  the  GOI  in  New 
Delhi (Directorate General of Foreign Trade and Ministry of Commerce) and Kolkata 
(Commerce & Industries Department, Government of West Bengal). 

1.5. 

Review investigation period 

(13)  The investigation of subsidisation covered the period from 1 April 2010 to 31 March 

2011 (‘the review investigation period’ or ‘RIP’). 

1.6. 

Parallel anti-dumping investigation 

(14)  On 2 April 201114 the Commission announced the initiation of a partial interim review 
of  the  current  anti-dumping  measures  pursuant  to  Article  11(3)  of  the  basic  anti-
dumping Regulation, limited in scope to the examination of dumping in respect of the 
applicant. 

(15) 

In  the  parallel  anti-dumping  investigation  it  was  found  that  the  circumstances  with 
regard to dumping have changed significantly and lastingly, therefore the current anti-
dumping measures applicable to the applicant have been changed. 

2. 

PRODUCT CONCERNED AND LIKE PRODUCT 

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14 

OJ C 102, 2.4.2011, p.15. 
OJ C 102, 2.4.2011, p.18. 

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2.1. 

Product concerned 

(16)  The product under review is PET having a viscosity of 78 ml/g or higher, according to 
the  ISO  Standard  1628-  5,  currently  falling  within  CN  code  3907  60  20  and 
originating in India ('the product concerned'). 

2.2. 

Like product 

(17)  The  investigation  revealed  that  the  product  concerned  produced  in  India  and  sold  to 
the Union is identical in terms of physical and chemical characteristics and uses to the 
product produced and sold on the domestic market in India. It is therefore concluded 
that  products  sold  on  the  domestic  and  export  markets  are  like  products  within  the 
meaning of Article 2(c) of the basic Regulation.  

3. 

RESULTS OF THE INVESTIGATION 

3.1. 

Subsidisation 

(18)  On the basis of the information submitted by the GOI and the applicant and the replies 
to  the  Commission’s  questionnaire,  the  following  schemes,  which  allegedly  involve 
the granting of subsidies, were investigated: 

Nationwide schemes:  

(a)  Duty Entitlement Passbook Scheme ('DEPBS'); 

(b)  Export  Oriented  Units  ('EOU')  /  Export  Processing  Zones  ('EPZ')  / 

Special Economic Zones ('SEZ'); 

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

(d)  Focus Market Scheme ('FMS'); 

(e)  Export Credit Scheme ('ECS'); 

(f) 

Income Tax Exemption Scheme ('ITES'). 

Regional schemes: 

(g)  West Bengal Incentive Scheme. 

(19)  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 Foreign Trade Policy 
('FTP')  documents,  which  are  issued  by  the  Ministry  of  Commerce  every  five  years 
and  updated  regularly.  Two  FTP  documents  are  relevant  to  the  RIP  of  this  case,  i.e. 
FTP 04-09 and FTP 09-14. The latter entered into force in August 2009. In addition, 
the  GOI  also  sets  out  the  procedures  governing  FTP  04-09  and  FTP  09-14  in  a 
'Handbook of Procedures, Volume I' ('HOP I 04-09' and 'HOP I 09-14' respectively). 
The Handbook of Procedures is also updated on a regular basis. 

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

(21)  Scheme (f) is based on the Income Tax Act of 1961, which is amended by the yearly 

Finance Act. 

(22)  Scheme  (g)  is  administered  by  the  Government  of  West  Bengal  and  set  out  in 
Government of West Bengal Commerce & Industries Department notification No 580-
CI/H  of  22  June  1999  (WBIS  1999),  replaced  by  notification  No  134-
CI/O/Incentive/17/03/I of 24 March 2004 (WBIS 2004). 

3.2. 

Duty Entitlement Passbook Scheme (‘DEPBS’) 

(a)  Legal Basis 

(23)  The  detailed  description  of  the  DEPBS  is  contained  in  paragraphs  4.3  of  FTP  04-09 

and FTP 09-14 as well as in chapter 4 of HOP I 04-09 and HOP I 09-14.  

(b)  Eligibility 

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

(c)  Practical implementation of the DEPBS 

(25)  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  regardless  of  whether  import  duties  have  actually 
been  paid  or  not.  The  DEPB  rate  for  the  product  concerned  during  the  RIP  of  the 
current investigation was 8% of FOB value, subject to a value cap of INR 58/kg. As a 
result, the maximum benefit is INR 4,64/kg. 

(26)  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,  during  the 
dispatch  procedure,  an  export  shipping  bill.  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 was made. Therefore, there is no possibility 
for a retroactive amendment to the level of the benefit. 

(27) 

It was found that in accordance with Indian accounting standards, DEPBS credits can 
be booked on an accrual basis as income in the commercial accounts, upon fulfilment 
of  the  export  obligation.  Such  credits  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.  DEPBS  credits  are  freely  transferable  and  valid  for  a 
period of 24 months from the date of issue. 

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(28)  Applications  for  DEPBS  credits  are  electronically  filed  and  can  cover  an  unlimited 
amount of export transactions. De facto, no strict deadlines to apply for DEPBS credits 
exist.  The  electronic  system  used  to  manage  DEPBS  does  not  automatically  exclude 
export transactions exceeding the deadline submission periods mentioned in paragraph 
4.47 of HOP I 04-09 and HOP I 09-14. Furthermore, as clearly provided in paragraph 
9.3  of  the  HOP  I  04-09  and  HOP  I  09-14,  applications  received  after  the  expiry  of 
submission deadlines can always be considered with the imposition of a minor penalty 
fee (i.e. 10% of the entitlement). 

(29) 

It was found that the applicant used this scheme during the RIP. 

(d)  Conclusions on DEPBS 

(30)  The  DEPBS  provides  subsidies  within  the  meaning  of  Article  3(1)(a)(ii)  and  Article 
3(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. 

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

(32)  This  scheme  cannot  be  considered  as  permissible  duty  drawback  system  or 
substitution  drawback  system  within  the  meaning  of  Article  3(1)(a)(ii)  of  the  basic 
Regulation  as  claimed  by  the  applicant.  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  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)  Abolishment of the DEPB scheme 

(33)  With Public Notice No. 54 (RE-2010) /2009-2014 of 17 June 2011, the DEPB scheme 
got  a  final  extension  of  3  months  until  30  September  2011.  As  no  further  extension 
was published subsequently, the DEPB scheme has effectively been withdrawn from 
30 September 2011 onwards. Consequently, this scheme will not confer any benefits 
on  the  applicant  after  30  September  2011.  It  has  therefore  be  verfied  whether,  in 
accordance with Article 15(1) of the basic Regulation, measures should be imposed on 
this scheme. 

(34) 

In this respect, it was established that the applicant received similar benefits pursuant 
to the parallel "duty drawback" scheme. The duty drawback rate for PET was 5,5% of 

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FOB value, subject to a maximum amount of INR 5,50/kg. However, since the "duty 
drawback"  scheme  was  not  used  during  the  RIP,  it  is  not  possible  to  calculate  a 
subsidy amount for this scheme. 

(35)  The applicant claimed that the Duty Drawback scheme conforms with the "guidelines 
on  consumption  of  inputs  in  the  production  process"  in  Annex  II  of  the  basic 
Regulation,  specifically  paragraph  I  of  said  Annex.  However,  similar  to  the  DEPB 
scheme,  it  was  established  that  the  duty  drawback  rate  is  determined  regardless  of 
whether import duties have actually been paid or not. 

(f)  Calculation of the subsidy amount 

(36) 

In  accordance  with  Articles  3(2)  and  5  of  the  basic  Regulation,  the  amount  of 
countervailable  subsidies  was  calculated  in  terms  of  the  benefit  conferred  on  the 
recipient, which is found to exist during the review investigation period. 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 3(1)(a)(ii) of the basic Regulation. 

(37) 

In  light  of  the  above,  it  is  considered  appropriate  to  assess  the  benefit  under  the 
DEPBS as being the sum of the credits earned on all export transactions made under 
this scheme during the RIP.  

(38)  Where justified claims were made, fees necessarily incurred to obtain the subsidy were 
deducted from the credits so established to arrive at the subsidy amounts as numerator, 
pursuant to Article 7(1)(a) of the basic Regulation.  

(39) 

In  accordance  with  Article  7(2)  of  the  basic  Regulation  these  subsidy  amounts  have 
been allocated over the total export turnover 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.  

(40)  Based  on  the  above,  the  subsidy  rate  established  in  respect  of  this  scheme  for  the 

applicant during the RIP amounts to 6,7%. 

3.3. 

(41) 

Export Oriented Units ('EOU') / Export Processing Zones ('EPZ') / Special Economic 
Zones ('SEZ') 

In  the  course  of  the  investigation  it  was  found  that  the  applicant  did  not  obtain  any 
benefits under EOU/EPZ/SEZ during the RIP. It was therefore not necessary to further 
analyse these schemes in this investigation. 

3.4. 

Export Promotion Capital Goods scheme (‘EPCGS’) 

(a)  Legal basis 

(42)  The detailed description  of  EPCGS  is  contained  in  chapter 5 of FTP 04-09 and FTP 

09-14 as well as in chapter 5 of HOP I 04-09 and HOP I 09-14.  

(b)  Eligibility 

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(43)  Manufacturer-exporters,  merchant-exporters  “tied  to”  supporting  manufacturers  and 

service providers are eligible for this scheme.  

(c)  Practical implementation 

(44)  Under  the  condition  of  an  export  obligation,  a  company  is  allowed  to  import  capital 
goods  (new  and  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.  The  scheme  provides  for  a  reduced  import  duty  rate  of  5%  applicable  to  all 
capital goods imported under the scheme. 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. Under FTP 09-14 the capital goods can be imported with 0% 
duty rate under the EPCGS but in such case the time period for fulfilment of the export 
obligation is shorter.  

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

(46) 

It was found that the applicant used this scheme during the RIP. 

(d)  Conclusion on EPCGS 

(47)  The  EPCGS  provides  subsidies  within  the  meaning  of  Article  3(1)(a)(ii)  and  Article 
3(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 the company’s liquidity. 

(48)  Furthermore,  EPCGS  is  contingent  in  law  upon  export  performance,  since  such 
licences cannot be obtained without a commitment to export. Therefore it is deemed to 
be specific and countervailable under Article 4(4), first subparagraph, point (a) of the 
basic  Regulation.  It  has  been  claimed  by  the  applicant  that  EPCGS  subsidies  with 
regard  to  the  purchase  of  capital  goods  where  the  export  obligation  was  already 
fulfilled  before  the  RIP,  should  not  anymore  be  treated  as  contingent  upon  export 
performance. Therefore they should not be treated as specific subsidies and should not 
be countervailed. However, this claim has to be rejected. It has to be underlined that 
the subsidy itself was contingent upon export performance i.e. it would not have been 
granted had the company not accepted a certain export obligation. 

(49)  EPCGS  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. 
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. 

(e)  Calculation of the subsidy amount 

(50)  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 

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across a period which reflects the normal depreciation period of such capital goods in 
the industry concerned, i.e. 18,93 years. Interests were added to this amount in order to 
reflect  the  full  value  of  the  benefit  over  time.  The  commercial  interest  rate  for  local 
currency  loans  during  the  review  investigation  period  in  India  was  considered 
appropriate for this purpose. 

(51) 

In accordance with Articles 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.  

(52)  The subsidy rate established in respect of this scheme for the applicant during the RIP 

amounts to 0,6%. 

3.5. 

Focus Market Scheme ('FMS')  

(a)  Legal basis 

(53)  The detailed description of FMS is contained in paragraph 3.9.1 to 3.9.2.2 of FTP 04-
09  and  paragraph  3.14.1  to  3.14.3  of  FTP  09-14  and  in  paragraph  3.20  to  3.20.3  of 
HOP I 04-09 and paragraph 3.8 to 3.8.2 of HOP I 09-14. 

(b)  Eligibility 

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

(c)  Practical implementation 

(55)  Under this scheme exports of all products to countries notified under Appendix 37(C) 
of HOP I 04-09 and HOP I 09-14 are entitled to duty credit equivalent to 2,5% of the 
FOB  value  of  products  exported  under  this  scheme.  Certain  type  of  export  activities 
are  excluded  from  the  scheme,  e.g.  exports of  imported  goods  or  transhipped  goods, 
deemed exports, service exports and export turnover of units operating under special 
economic  zones/export  operating  units.  Also  excluded  from  the  scheme  are  certain 
types of products, e.g. diamonds, precious metals, ores, cereals, sugar and petroleum 
products. 

(56)  The duty credits under FMS are freely transferable and valid for a period of 24 months 
from the date of issue of the relevant credit entitlement certificate. They can be used 
for payment of custom duties on subsequent imports of any inputs or goods including 
capital goods. 

(57)  The credit entitlement certificate is issued from the port from which the exports have 
been  made  and  after  realisation  of  exports  or  shipment  of  goods.  As  long  as  the 
applicant provides to the authorities copies of all relevant export documentation (e.g. 
export  order,  invoices,  shipping  bills,  bank  realisation  certificates),  the  GOI  has  no 
discretion over the granting of the duty credits. 

(58) 

It was found that the applicant used this scheme during the RIP. 

(d)  Conclusion on FMS 

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(59)  The FMS provides subsidies within the meaning of Article 3(1)(a)(ii) and Article 3(2) 
of  the  basic  Regulation.  A  FMS  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. In addition, the FMS duty credit 
confers a benefit upon the exporter, because it improves its liquidity.  

(60)  Furthermore,  FMS  is  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. 

(61)  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 point (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. 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 point 
(i) of Annex I and Annexes II and III of the basic Regulation. An exporter is eligible 
for FMS 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  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 FMS. Moreover, an exporter can use FMS duty 
credits in order to import capital goods although capital goods are not covered by the 
scope  of  permissible  duty  drawback  systems,  as  set  out  in  Annex  I  point  (i)  of  the 
basic  Regulation,  because  they  are  not  consumed  in  the  production  of  the  exported 
products. 

(e)  Calculation of the subsidy amount 

(62)  The  amount  of  countervailable  subsidies  was  calculated  on  the  basis  of  the  benefit 
conferred  on  the  recipient,  which  is  found  to  exist  during  the  RIP  as  booked  by  the 
applicant  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  subsidy  amount 
(nominator) 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. 

(63)  The  subsidy  rate  established  with  regard  to  this  scheme  during  the  RIP  for  the 

applicant amounts to less than 0,1%. 

3.6. 

Export Credit Scheme ('ECS') 

(64) 

It was established that the applicant received the  benefit of  preferential interest rates 
for  its  export  financing  during  the  RIP  until  30  June  2011.  The  legal  basis  for  this 
preferential  interest  rate  is  set  out  in  Master  Circular  on  Rupee  /  Foreign  Currency 
Export  Credit  &  Customer  Services  to  Exporters  DBOD  No  DIR.(Exp).  BC 

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07/04.02.02/2009-10  of  the  Reserve  Bank  of  India  (RBI),  which  is  addressed  to  all 
commercial banks in India. 

(65)  On 1 July 2011, the terms and conditions of the ECS were revised by Master Circular 
on Rupee / Foreign Currency Export Credit & Customer Services to Exporters DBOD 
No.DIR.  (Exp).BC.04/04.02.002/2011-12.  The  revised  conditions  did  not  confer  any 
benefits on the applicant. In accordance with Article 15(1) of the basic Regulation, this 
scheme shall therefore not be countervailed. 

3.7. 

Income Tax Exemption Scheme ('ITES') 

(66) 

In  the  course  of  the  investigation  it  was  found  that  the  applicant  did  not  obtain  any 
benefits under ITES during the RIP. It was therefore not necessary to further analyse 
this scheme in this investigation. 

3.8.  West Bengal Incentive Scheme 1999 ('WBIS 1999') 

(67)  The  State  of  West  Bengal  grants  to  eligible  industrial  enterprises  incentives  in  the 
form of a number of benefits, including a remission of sales tax and central sales tax 
on  sales  of  finished  goods,  in  order  to  encourage  the  industrial  development  of 
economically backward areas within this State. 

(a)  Legal basis 

(68)  The detailed description of this scheme as applied by the Government of West Bengal 
('GOWB')  is  set  out  in  Notification  No  580-CI/H  of  22  June1999  of  the  GOWB 
Commerce & Industries Department. 

(b)  Eligibility 

(69)  Companies  setting  up  a  new  industrial  establishment  or  making  a  large-scale 
expansion  of  an  existing  industrial  establishment  in  backward  areas  are  eligible  to 
avail  benefits  under  this  scheme.  Nevertheless,  an  exhaustive  list  of  ineligible 
industries (negative list of industries) exists preventing companies in certain fields of 
operations from benefiting from the incentives. 

(c)  Practical implementation 

(70)  Under  this  scheme,  companies  must  invest  in  backward  areas.  These  areas,  which 
represent  certain  territorial  units  in  West  Bengal  are  classified  according  to  their 
economic  development  into  different  categories  while  at  the  same  time  there  are 
developed  areas  excluded  from  the  application  of  the  incentive  schemes.  The  main 
criteria to establish the amount of the incentives are the size of the investment and the 
area in which the enterprise is or will be located. 

(d)  Conclusion 

(71)  This scheme provides subsidies within the meaning of Articles 3(1)(a)(ii) and 3(2) of 
the  basic  Regulation.  It  constitutes  a  financial  contribution  by  the  GOWB,  since  the 
incentives  granted,  in  the  present  case  sales  tax  and  central  sales  tax  remissions  on 
sales  of  finished  goods,  decrease  tax  revenue  which  would  be  otherwise  due.  In 

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addition, these incentives confer a benefit upon a company, because they improve its 
financial situation since taxes otherwise due are not paid. 

(72)  Furthermore, this scheme is regionally specific in the meaning of Articles 4(2)(a) and 
4(3)  of  the  basic  Regulation  since  it  is  only  available  to  certain  companies  having 
invested  within  certain  designated  geographical  areas  within  the  jurisdiction  of  the 
State  concerned.  It  is  not  available  to  companies  located  outside  these  areas  and,  in 
addition, the level of benefit is differentiated according to the area concerned. 

(73)  The WBIS 1999 is therefore countervailable. 

(e)  Calculation of the subsidy amount 

(74)  The  subsidy  amount  was  calculated  on  the  basis  of  the  amount  of  the  sales  tax  and 
central  sales  tax  on  sales  of  finished  goods  normally  due  during  the  review 
investigation period but which remained unpaid under this scheme. In accordance with 
Article 7(2) of the basic Regulation, the amount of subsidy (numerator) have then been 
allocated  over  total  sales  during  the  review  investigation  period  as  appropriate 
denominator, because the subsidy is not export contingent and it was not granted by 
reference  to  the  quantities  manufactured,  produced,  exported  or  transported.  The 
subsidy rate obtained amounted to 1,4%. 

3.9. 

Amount of countervailable subsidies 

(75)  The amount of countervailable subsidies determined in accordance with the provisions 
of  the  basic  Regulation,  expressed  ad  valorem,  for  the  applicant  amounts  to  8,7%. 
These  amounts  of  subsidisation  exceed  the  de  minimis  threshold  mentioned  under 
Article 14(5) of the basic Regulation. 

(76)  The levels of subsidisation established in the current procedure for the applicant is as 

follows:  

SCHEMES 

DEPBS 

EPCGS 

FMS 

WBIS 

Total 

Dhunseri Tea & 
Petrochem 

6,7% 

0,6% 

< 0,1% 

1,4% 

8,7% 

(77) 

It  is  therefore  considered  that,  pursuant  to  Article  19  of  the  basic  Regulation, 
subsidisation continued during the RIP. 

3.10. 

Lasting nature of changed circumstances with regard to subsidisation 

(78) 

(79) 

In  accordance  with  Article  19(4)  of  the  basic  Regulation,  it  was  also  examined 
whether the changed circumstances could reasonably be considered to be of a lasting 
nature. 

It  was  established  that,  during  the  RIP,  the  applicant  continued  to  benefit  from 
countervailable  subsidisation  by  the  GOI.  Further,  the  subsidy  rate  found  during  the 
present  review  is  lower  than  that  established  during  the  last  review  investigation.  It 
was equally established that the changes claimed by the applicant in recital (7) above 

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did  indeed  take  place.  Indeed,  the  applicant  did  no  longer  benefit  from  the  EOU 
scheme during the RIP as indicated in recital (41) above. 

(80)  However, it was also established that the most important scheme used by the applicant 
during  the  RIP  (i.e.  DEBPS)  was  discontinued  on  30  September  2011,  and  another 
scheme not used during the RIP (i.e. duty drawback) is currently used by the applicant. 
It  is  therefore  evident  that  the  situation  prevailing  during  the  RIP  is  not  of  a  lasting 
nature, as it has already significantly changed in the meantime. 

(81) 

It  is  therefore  concluded  that  the  partial  interim  review  investigation  should  be 
terminated  without  amending  the  countervailing  measures  in  force.  The  applicant  as 
well as the other parties concerned were informed of the facts and considerations on 
the basis of which it was intended to propose the termination of the investigation, 

HAS ADOPTED THIS REGULATION:  

Article 1 

The  partial  interim  review  of  the  countervailing  measures  applicable  to  imports  of 
polyethylene terephthalate currently falling within CN code 3907 60 20 and originating, inter 
alia, in India, is hereby terminated without amending the measures in force. 

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

Article 2 

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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