Proposal for a COUNCIL IMPLEMENTING REGULATION imposing a definitive countervailing duty on imports of certain polyethylene terephthalate (PET) originating in India following an expiry review pursuant to Article 18 of Regulation (EC) No 597/2009
Date: 2013-04-23
Institutions: European Commission
Subjects: India, anti-dumping measure, import (EU), originating product, plastics

EUROPEAN 
COMMISSION 

Brussels, 23.4.2013  
COM(2013) 235 final 

2013/0123 (NLE) 

Proposal for a 

COUNCIL IMPLEMENTING REGULATION 

imposing a definitive countervailing duty on imports of certain polyethylene 
terephthalate (PET) originating in India following an expiry review pursuant to Article 
18 of Regulation (EC) No 597/2009 

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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  expiry  review  of  the 
countervailing  duty  in  force  on  imports  of  certain  polyethylene  terephthalate 
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 
By Regulation (EC) No 2603/20001, the Council imposed a definitive countervailing 
duty on imports of certain polyethylene terephthalate ('PET') originating, inter alia, in 
India. 
By  Council  Regulation  (EC)  No  1645/20052,  the  Council  amended  the  level  of 
countervailing  measures  in  force  against  imports  of  PET  from  India.  The 
amendments were a result of an accelerated review initiated pursuant to Article 20 of 
the basic Regulation. 

Following an expiry review, the Council by Regulation (EC) No 193/2007 imposed a 
definitive  countervailing  duty  for  a  further  period  of  five  years  on  imports  of  PET 
originating in India. 

The  countervailing  measures  were  subsequently  amended  by  Council  Regulation 
(EC)  No  1286/2008  and  Council  Regulation  (EU)  No  906/2011,  following  interim 
reviews.  

A  later  interim  review  was  terminated  without  amending  the  measures  in  force  by 
Council Implementing Regulation (EU) No 559/2012. 
By  Decision  2000/745/EC3  the  Commission  accepted  undertakings  setting  a 
minimum import price offered by three exporting producers in India.  

Consistency with other policies and objectives of the Union 

Not applicable. 

2. 

RESULTS OF CONSULTATIONS WITH THE INTERESTED PARTIES AND 
IMPACT ASSESSMENTS 

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. 

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3 

OJ L 301, 30.11.2000, p.1. 
OJ L 266, 11.10.2005, p.1. 
OJ L 301, 30.11.2000, p. 88, as from time to time amended. 

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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 provide 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 

On  24  February  2012,  the  Commission  announced  by  a  notice,  published  in  the 
Official  Journal  of  the  European  Union,  the  initiation  of  an  expiry  review  of  the 
countervailing  measures  applicable  to  imports  of  certain  polyethylene  terephthalate 
originating in India. 

The  review  was  initiated  following  a  request  lodged  by  the  Committee  of 
Polyethylene  Terephthalate  Manufacturers  in  Europe  (CPME)  on  behalf  of  Union 
producers representing nearly 95% of the Union production of PET. 

The  review  investigation  found  continued  subsidisation  of  the  product  concerned 
which  would  result  in  the  recurrence  of  injury  to  the  Union  industry  in  case 
countervailing measures were lifted. It was further established that the continuation 
of measures was not against the interest of the Union. 

Therefore  it  is  suggested  that  the  Council  adopts  the  attached  proposal  for  a 
Regulation in order to extend the existing measures. 

Legal basis 

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. 

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: 

The basic Regulation does not provide for alternative options. 

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4. 

BUDGETARY IMPLICATION 

The proposal has no implication for the Union budget. 

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2013/0123 (NLE) 

Proposal for a 

COUNCIL IMPLEMENTING REGULATION 

imposing a definitive countervailing duty on imports of certain polyethylene 
terephthalate (PET) originating in India following an expiry review pursuant to Article 
18 of Regulation (EC) No 597/2009 

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  Community4  ('the 
basic Regulation') and in particular Article 18 thereof, 

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

Whereas: 

A. PROCEDURE 

1. 

(1) 

Measures in force 
By Regulation (EC) No 2603/20005, the Council imposed a definitive countervailing 
duty on imports of polyethylene terephthalate ('PET') originating, inter alia, in India. 
By  Council  Regulation  (EC)  No  1645/20056,  the  Council  amended  the  level  of 
countervailing measures in force against imports of PET from India. The amendments 
were  a  result  of  an  accelerated  review  initiated  pursuant  to  Article  20  of  the  basic 
Regulation.  Following  an  expiry  review,  the  Council  by  Regulation  (EC)  No 
193/20077 imposed a definitive countervailing duty for a further period of five years. 
The countervailing measures were subsequently amended by Council Regulation (EC) 
No 1286/20088 and Council Implementing Regulation (EU) No 906/20119, following 
partial  interim  reviews.  A  later  partial  interim  review  was  terminated  without 
amending  the  measures  in  force  by  Council  Implementing  Regulation  (EU)  No 
559/201210. By Decision 2000/745/EC11the Commission accepted undertakings setting 
a minimum import price offered by three exporting producers in India. 

(2) 

The countervailing measures consist of a specific duty. The rate of the duty is between 
0  and  106.5  EUR  per  tonne  for  individually  named  Indian  producers  with  a  residual 
rate of 69.4 EUR per tonne imposed on imports from all other producers. 

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11 

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 L 232, 9.9.2011, p.19. 
OJ L 168, 28.6.2012, p.6. 
OJ L 301, 30.11.2000, p. 88. 

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2. 

(3) 

3. 

(4) 

(5) 

(6) 

4. 

(7) 

5. 

(8) 

6. 

6.1. 

(9) 

Existing anti-dumping measures 
By Regulation (EC) No 2604/200012, the Council imposed a  definitive  anti-dumping 
duty on imports of PET originating, inter alia, in India. Following an expiry review, 
the  Council,  by  Regulation  (EC)  No  192/200713,  imposed  a  definitive  anti-dumping 
duty for a further period of five years.  

Request for an expiry review 
Following  the  publication  of  a  Notice  of  impending  expiry14  of  the  definitive 
countervailing measures in force, the Commission, on 25 November 2011, received a 
request for the initiation of the review, pursuant to Article 18 of the basic Regulation 
('the  expiry  review').  The  request  was  lodged  by  the  Committee  of  Polyethylene 
Terephthalate  Manufacturers  in  Europe  ('the  applicant')  on  behalf  of  producers 
representing nearly 95% of the Union production of certain polyethylene terephthalate. 

The request was based on the grounds that the expiry of the measures would be likely 
to  result  in  a  continuation  or  recurrence  of  subsidisation  and  injury  to  the  Union 
industry. 

Prior to the initiation of the expiry review, and in accordance with Articles 22(1) and 
10(7)  of  the  basic  Regulation,  the  Commission  notified  the  Government  of  India 
('GOI') that it had received a properly documented review request and invited the GOI 
for consultations with the aim of clarifying the situation as regards the contents of the 
review request and arriving at a mutually agreed solution. However, the Commission 
did not receive any answer from the GOI regarding its offer for consultations.  

Initiation of an expiry review 

Having  determined,  after  having  consulted  the  Advisory  Committee,  that  sufficient 
evidence existed for the initiation of an expiry review, the Commission announced on 
24 February 2012, by a notice published in the Official Journal of the European Union 
15 ('the notice of initiation'), the initiation of an expiry review pursuant to Article 18 of 
the basic Regulation. 

Parallel investigation 

On 24 February 2012, the Commission also opened a review pursuant to Article 11(2) 
of Regulation (EC) No 1225/2009 on the anti-dumping measures in force on imports 
of PET originating in India, Indonesia, Malaysia, Taiwan and Thailand16.  

Investigation 

Review investigation period and the period considered 

The  investigation  of  the  likelihood  of  a  continuation  or  recurrence  of  subsidisation 
covered the period from 1 January 2011 to 31 December 2011 (hereinafter referred to 
as the 'review investigation period' or 'RIP'). The examination of the trends relevant for 
the assessment of the likelihood of a continuation or recurrence of injury covered the 
period from 1 January 2008 to the end of the RIP (hereinafter referred to as the 'period 
considered'). 

6.2. 

Parties concerned by the investigation 

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16 

OJ L 301, 30.11.2000, p. 21. 
OJ L 59, 27.2.2007, p.1. 
OJ C 116, 14.4.2011, p.10 
OJ C 55, 24.2.2012, p.14 
OJ C 55, 24.2.2012, p. 4. 

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(10)  The  Commission  officially  advised  the  applicant,  the  exporting  producers  in  the 
country  concerned,  the  importers,  the  users  known  to  be  concerned,  and  the 
representatives of the country concerned of the initiation of the expiry review. 

(11) 

(12) 

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.  All 
interested parties, who so requested and showed that there were particular reasons why 
they should be heard, were granted a hearing. 

In view of the apparent large number of exporting producers in India as well as Union 
producers  and  importers  it  was  considered  appropriate  to  examine  whether  sampling 
should  be  used  in  accordance  with  Article  27  of  the  basic  Regulation.  In  order  to 
enable the Commission to decide whether sampling would be necessary and, if so, to 
select  a  sample,  the  exporting  producers  and  unrelated  importers  were  requested  to 
make themselves known within 15 days of the initiation of the review and to provide 
the Commission with the information requested in the Notice of initiation. 

(13)  Seven  exporting  producers  responded  to  the  sampling  exercise  and  indicated  a 
willingness to cooperate with the review investigation. On this basis, a sample of three 
exporting  producers  was  selected  based  on  the  volume  of  exports  to  the  Union.  No 
objections were made to this sample either by the sampled producers themselves, non-
sampled producers or the relevant authorities in India. 

(14)  The three sampled exporting producers were duly sent questionnaires to complete and 
replies  were  received  from  them  all.  However  the  questionnaire  reply  of  one  Indian 
sampled producer revealed that it only exported insignificant volumes of the product 
concerned during the RIP and therefore it was not relevant to calculate subsidy rates 
for that company. Verification visits were eventually completed in the two remaining 
exporting producers which together represented 99% of total imports in volume from 
India to the Union during the RIP. 

(15)  Following  the  disclosure  of  the  essential  facts  and  considerations  (‘disclosure’),  one 
Indian  cooperating  producer  requested  a  calculation  of  a  subsidy  margin.  In  this 
respect it was reconfirmed that the exports from this company were insignificant and 
consequently had no impact on the determination of the likelihood of continuation or 
recurrence  of  subsidisation  in  the  present  expiry  review.  Therefore,  this  request  was 
rejected.  

(16)  The Commission announced in the notice of initiation that it had provisionally selected 
a  sample  of  Union  producers.  This  sample  consisted  of  four  companies,  out  of  the 
thirteen Union producers that were known prior to the initiation of the investigation, 
selected on the basis of the largest representative volume of production and sales that 
can reasonably be investigated within the time available. The sample represented over 
50%  of  the  total  estimated  Union  production  and  sales  during  the  RIP.  Interested 
parties were invited to consult the file and to comment on the appropriateness of this 
choice  within  15  days  of  the  date  of  publication  of  the  notice  of  initiation.  All 
interested parties, who so requested and showed that there were particular reasons why 
they should be heard, were granted a hearing. 

(17)  Certain  interested  parties  raised  objections  concerning  the  sampling  of  Union 
producers.  They  claimed  that:  (i)  the  Commission  should  not  resort  to  sampling,  in 
particular,  since  no  sampling  was  used  in  the  previous  investigation;  (ii)  the  method 
used  for  the  selection  of  the  sample  was  contested  on  the  grounds  that  it  'confuses 
three different steps', namely, standing exercise, definition of the Union industry and 

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sampling exercise; (iii) the provisional sample was set up on the basis of incorrect and 
incomplete information; (iv) selected provisional sample is not representative because 
it  includes  entities  rather  than  groups;  it  was  also  claimed  that  including  companies 
that in one case went through a recent divestment or in another case have related sales 
diminishes the representativity of the sample.  

(18)  The arguments raised by the parties were addressed as follows:  

– 

– 

– 

– 

The decision to use a sample of Union producers is made for each investigation 
independently  depending  on  the  particular  circumstances  of  each  case  and 
Article 22(6) of the basic Regulation does not govern the use of such a sample 
for the determination of  injury  in the context of an expiry review. Unlike the 
previous  investigations,  where  the  investigation  of  all  companies  that  came 
forward and cooperated was feasible, the Commission considered in the current 
review  that,  in  view  of  their  large  number,  not  all  Union  producers  could  be 
reasonably investigated in the time available and that the conditions of Article 
27 were therefore met. 

The  Commission  did  not  'confuse'  the  determination  of  the  standing,  the 
determination of the Union industry and the selection of the provisional sample 
as  these  steps  remained  independent  from  each  other  and  were  decided  upon 
separately.  It  was  not  demonstrated  to  what  extent  the  use  of  the  production 
and sales data provided by the Union producers in the context of the standing 
exercise had affected the representativity of the sample. 

The sample was set up on the basis of the information available at the time of 
selection  in  accordance  with  Article  27  of  the  basic  Regulation.  The 
representativity  of  the  sample  was  reviewed  following  the  comments  of  the 
parties  concerning  specific  company  data.  None  of  the  comments  made  were 
considered founded. 

As required by Article 27 of the basic Regulation the sample was established to 
represent the largest representative volume of production and sales that can be 
reasonably  investigated  within  the  time  available.  The  entities  belonging  to 
larger groups that were found to operate independently from other subsidiaries 
of  the  same  group  were  considered  representative  of  the  Union  industry  and 
there  was  therefore  no  need  to  investigate  the  entire  group  on  a  consolidated 
basis.  At  the  same  time,  the  companies  were  sampled  as  economic  entities, 
ensuring that all relevant data could be verified. Moreover, the divestments and 
existence  of  related  sales  were  part  of  the  characteristics  of  the  sector  in  the 
period  considered  and  therefore  none  of  these  elements  was  considered  to 
diminish the representativity of the sample.  

(19)  Following the disclosure the parties reiterated the above-mentioned arguments which 

have already been addressed.  

(20)  Sampling for unrelated importers was foreseen in the notice of initiation. None of the 
twenty four contacted unrelated importers cooperated in the present investigation. 

(21)  All  five  known  suppliers  of  raw  material  were  contacted  upon  the  initiation  and 
received  relevant  questionnaire.  Two  suppliers  came  forward  and  replied  to  the 
questionnaire.  

(22)  All known users and users' associations were contacted upon the initiation. Seventeen 
users submitted a questionnaire reply. Twenty associations of users from 16 Member 
States made themselves known and made submissions.  

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7. 

Verification of information received 

(23)  The  Commission  sought  and  verified  all  the  information  it  deemed  necessary  for  a 
determination  of  the  likelihood  of  a  continuation  or  recurrence  of  subsidisation  and 
resulting  injury  and  of  the  Union  interest.  Verification  visits  were  carried  out  at  the 
premises of the GOI in Delhi and the following interested parties:  

(a)  Exporting producers 

– 

– 

Dhunseri Petrochem and Tea Limited, Kolkata, India;  

Reliance Industries Limited, Navi Mumbai, India;  

(b)  Union producers  

– 

– 

– 

– 

Indorama Polymers Europe, UAB, Netherlands; 

Equipolymers, Italy, Germany; 

Neo Group, UAB, Lithuania; 

Novapet SA, Spain; 

(c)  Users in the Union  

– 

– 

Coca-Cola Europe, Belgium; 

Nestle Waters France, France. 

B. PRODUCT CONCERNED AND LIKE PRODUCT 

1. 

Product concerned 

(24)  The  product  concerned  by  this  review  is  the  same  as  the  one  in  the  original 
investigation, namely PET with a viscosity number of 78 ml/g or higher, according to 
ISO Standard 1628-5, originating in India. It is currently falling within CN code 3907 
60 20. 

2. 

Like product 

(25)  As  in  the  original  and  in  the  review  investigations,  it  was  found  that  the  product 
concerned,  i.e.  PET  produced  and  sold  on  the  domestic  market  of  the  country 
concerned,  and  PET  produced  and  sold  by  Union  producers  had  the  same  basic 
physical and chemical characteristics and uses. They were therefore considered to be 
like products according to Article 2(c) of the basic Regulation. 

C. LIKELIHOOD OF A CONTINUATION OR RECURRENCE OF SUBSIDISATION 

1. 

Introduction 

(26)  On the basis of the information contained in the review request 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)  Duty Drawback Scheme ('DDS') 

(c)  Focus Market Scheme ('FMS') 

(d)  Focus Product Scheme ('FPS') 

(e)  Status Holder Incentive Scrip ('SHIS') 

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(f)  Advance Authorisation Scheme ('AAS') 

(g)  Export Promotion Capital Goods Scheme ('EPCGS') 

(h)  Special economic zones/export oriented units ('SEZ/EOU') 

(i)  Export Credit Scheme ('ECS') 

(j) 

Income Tax Exemption Scheme ('ITES')  

Regional schemes 

(k)  West Bengal Incentive Scheme ('WBIS') 

(l)  Capital investment incentive scheme of the Government of Gujarat 

(m)  Gujarat sales tax incentive scheme ('GSTIS') 

(n)  Gujarat electricity duty exemption scheme ('GEDES') 

(o)  Package Scheme of Incentives ('PSI') of the Government of Maharashtra 

(27)  The schemes specified under points (a) and (c) to (h) 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’ documents, which are issued by the Ministry of 
Commerce  every  five  years  and  updated  regularly.  The  Foreign  Trade  Policy 
document relevant to the RIP of this investigation is the 'Foreign Trade Policy 2009-
2014' ('FTP 09-14'). In addition, the GOI also sets out the procedures governing FTP 
09-14 in a ‘Handbook of Procedures, Volume I’ (‘HOP I 09-14’). The Handbook of 
Procedures is also updated on a regular basis. 

(28)  The scheme specified under point (b) above is based on section 75 of the Customs Act 
of 1962, on section 37 of the Central Excise Act of 1944, on sections 93A and 94 of 
the Financial Act of 1994 and on the Customs, Central Excise Duties and Service Tax 
Drawback  Rules  of  1995.  Drawback  rates  are  published  on  a  regular  basis;  those 
applicable to the RIP were the All Industry Rates (AIR) of Duty Drawback 2011-12, 
published in notification No. 68 / 2011- Customs (N.T.), dated 22.09.2011. The duty 
drawback scheme is also referred to as a duty remission scheme in chapter 4 of FTP 
2009-2014. 

(29)  The  scheme  specified  under  point  (i)  above  is  based  on  sections  21  and  35A  of  the 
Banking  Regulation  Act  1949,  which  allow  the  Reserve  Bank  of  India  (‘RBI’)  to 
direct commercial banks in the field of export credits. 

(30)  The scheme specified under point (j) above is based on the Income Tax Act of 1961, 

which is amended by the yearly Finance Act. 

(31)  The  scheme  specified  under  point  (k)  above  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,  replaced  by  notification  No 
134-CI/O/Incentive/17/03/I of 24 March 2004. 

(32)  The  scheme  specified  under  point  (l)  above  is  administered  by  the  Government  of 

Gujarat and is based on Gujarat’s industrial incentive policy. 

(33)  The  scheme  specified  under  point  (m)  above  is  administered  by  the  Government  of 

Gujarat and based on its industrial incentive policy 

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(34)  The scheme specified under point (n) above is based on the Bombay Electricity Duty 

Act of 1958. 

(35)  The  scheme  specified  under  point  (o)  above  is  managed  by  the  state  of  Maharashtra 
and is based on resolutions of the Government of Maharashtra Industries, Energy and 
Labour Department. 

(36)  The  investigation  revealed  that,  during  the  RIP,  the  following  schemes  conferred 

benefits upon the sampled exporting producers in respect of the product concerned: 

Nationwide scheme  

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

(b)  Duty Drawback Scheme ('DDS') 

(c)  Focus Market Scheme ('FMS') 

(d)  Status Holder Incentive Scrip ('SHIS') 

(e)  Advance Authorisation Scheme ('AAS') 

Regional schemes 

•  West Bengal Incentive Scheme ('WBIS'). 

2. 

Duty Entitlement Passbook Scheme ('DEPBS') 

(a)  Legal Basis  

(37)  The  detailed  description  of  the  DEPBS  is  contained  in  chapter  4.3  of  FTP  09-14  as 

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

(b)  Eligibility  

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

(c)  Practical implementation 

(39)  An exporter can apply for DEPBS credits which are calculated as a percentage of the 
value  of  products  exported  under  this  scheme.  Such  DEPBS  rates  have  been 
established  by  the  Indian  authorities  for  most  products,  including  the  product 
concerned.  They  are  determined  on  the  basis  of  Standard  Input  Output  Norms 
('SIONs') taking into account a presumed import content in the export product and the 
customs duty incidence on the presumed import content, regardless of whether import 
duties  have  actually  been  paid  or  not.  The  DEPBS  rate  for  the  product  concerned 
during the RIP of the current investigation was 8 % with a value cap of 58 INR/kg. 

(40)  To be eligible for benefits under this scheme, a company must export. At the time of 
the  export  transaction,  a  declaration  must  be  made  by  the  exporter  to  the  Indian 
authorities 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.  

(41) 

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 

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of  the  export  obligation.  Such  credits  can  be  used  for  payment  of  customs  duties  on 
subsequent  imports  of  any  goods,  except  capital  goods  and  goods  where  there  are 
import restrictions. 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. 

(42)  Applications  for  DEPBS  credits  are  electronically  filed  and  can  cover  an  unlimited 
amount  of export transactions. The deadline to submit applications is 3 months after 
exportation, but as clearly provided in paragraph 9.3 of the 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). 

(43) 

It  was  found  that  both  sampled  companies  used  this  scheme  during  the  first  three 
quarters of the RIP. 

(d)  Conclusion on DEPBS 

(44)  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. 

(45)  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.  

(46)  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.  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. 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 point (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 DEPBS and transition to DDS 

(47)  By means of Public Notice No 54 (RE-2010)/2009-2014 of 17 June 2011, the DEPBS 
received  a  final  three  months  extension  which  prolonged  its  applicability  until  30 
September 2011. As no further extension was published subsequently, the DEPBS has 
effectively  been  withdrawn  from  30  September  2011  onwards.  Therefore  it  was 
necessary to verify whether measures could be imposed with regard to Article 15(1) of 
the basic Regulation. 

(48)  The GOI explained to the Commission that upon withdrawal of the DEPBS scheme, 
companies  could  opt  for  other  duty  exemption/remission  schemes  defined  under 

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chapter  4  of  FTP  09-14,  i.e.  the  Advance  Authorisation  Scheme  (AAS)  or  the  Duty 
Drawback Scheme (DDS).  

(49)  The  investigation  revealed  that  both  sampled  companies  started  availing  of  DDS 
immediately  after  the  DEPBS  was  withdrawn.  It  must  be  noted  that  DDS  has  been 
introduced  in  1995  and  coexisted  with  DEPBS  during  the  three  first  quarters  of  the 
RIP  and  for  a  number  of  years  before  the  RIP.  DDS  could  however  not  be  availed 
simultaneously with DEPBS on the same exports. During the first three quarters of the 
RIP, the DDS rate amounted to 2.2% with a cap of 1.5 INR/kg, making the DDS less 
generous and hence less attractive than the DEPBS. It must be noted that the GOI took 
steps to organise a smooth transition from DEPBS to DDS, as demonstrated in circular 
No.  –  42  /2011-Customs,  dated  22/09/2011.  In  this  circular  it  is  explained  that  "the 
[duty] drawback schedule this year incorporates items which were hitherto under the 
DEPB[S] scheme". The same circular states that for sectors operating under DEPBS, it 
"has  been  decided  to  provide  a  smooth  transition  for  items  in  these  sectors  while 
incorporating these in the drawback schedule. As a transitory arrangement, these items 
will suffer a modest reduction from their DEPB[S] rates, ranging from 1% to 3% for 
most  items."  In  other  words,  this  circular  indicates  that  the  duty  drawback  rates  in 
force w.e.f. 01/10/2011 were determined so that they would confer a similar benefit as 
the withdrawn DEPBS. 

(50)  As of 1 October, the DDS rate applicable to the product concerned was increased from 
2.2% to 5.5% of FOB value and the associated cap was raised from 1.5 INR/kg to 5.5 
INR/kg.  This  new  rate  was  found  to  confer  similar  levels  of  subsidiation  as  the 
DEPBS  was  until  the  30  September  2011  with  its  8%  rate  and  58  INR/kg  cap.  In 
function  of  PET  prices  prevailing  during  the  RIP,  the  DEPBS  cap  was  generally 
applicable resulting in a theoretical benefit of 4.64 INR/kg or 5.8%. In the case of the 
DDS, the cap was not applicable so that the theoretical benefit amounted to 5.5%. 

(51)  The  investigation  confirmed  the  reasoning  of  the  previous  recital.  The  average 
annualised subsidy margins of the sampled companies were 5.5% and 6% for DEPB 
and DDS, respectively. 

(52)  A comparison of both schemes also shows that they share numerous implementation 

characteristics.  

(53)  Recitals (47)(48) to (51) above demonstrate that, even though the DEPBS scheme was 
withdrawn, the underlying benefits continued to be conferred without discontinuation 
and  at  an  almost  identical  level  by  providing  a  seamless  transition  to  the  duty 
drawback  scheme.  For  that  reason,  it  is  concluded  that  the  subsidies  have  not  been 
withdrawn within the meaning of Article 15(1) and that DEPBS is countervailable. 

(54)  Following  the  disclosure  of  the  essential  facts  and  considerations,  one  exporting 
producer  argued  that  the  DEPBS  has  been  withdrawn  and  therefore  should  not  be 
countervailed. In reply to this, it is noted that, as also explained above in recital (47) 
above,  the  DEPBS  has  ceased  on  30  September  2012.  However,  the  subsidisation 
continued and exporters have the possibility as an alternative to the DEPBS to apply 
for and receive benefits under e.g. the DDS or the AAS. Consequently, this argument 
was rejected. 

(f)  Calculation of the subsidy amount 

(55) 

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, 

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it  was  considered  that  the  benefit  is  conferred  on  the  recipient  at  the  time  when  an 
export  transaction  is  made  under  this  scheme.  At  that  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.  Once  the  customs  authorities 
issue  an  export  shipping  bill  which  shows,  inter  alia,  the  amount  of  DEPBS  credit 
which  is  to  be  granted  for  that  export  transaction,  the  GOI  has  no  discretion  as  to 
whether  or  not  to  grant  the  subsidy.  In  the  light  of  the  above,  it  is  considered 
appropriate  to  assess  the  benefit  under  the  DEPBS  as  being  the  sums  of  the  credits 
earned on export transactions made under this scheme during the RIP. 

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

(57)  Based  on  the  above,  the  subsidy  rates  established  in  respect  of  this  scheme  for  the 

sampled companies amounted to 3.78% and 4.42% respectively. 

3. 

Duty Drawback Scheme ('DDS') 

(a)  Legal Basis 

(58)  The  detailed  description  of  the  DDS  is  contained  in  the  Custom  &  Central  Excise 

Duties Drawback Rules, 1995 as amended by successive notifications. 

(b)  Eligibility 

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

(c)  Practical implementation 

(60)  An  eligible  exporter  can  apply  for  drawback  amount  which  is  calculated  as  a 
percentage of the FOB value of products exported under this scheme. The drawback 
rates  have  been  established  by  the  GOI  for  a  number  of  products,  including  the 
product concerned. They are determined on the basis of the average quantity or value 
of materials used as inputs in the manufacturing of a product and the average amount 
of duties paid on inputs. They are applicable regardless of whether import duties have 
actually been paid or not. The DDS rate for the product concerned during the RIP was 
5.5% of FOB value, subject to a cap of 5.5 INR/kg. 

(61)  To be eligible to benefits under this scheme, a company must export. At the moment 
when  shipment  details  are  entered  in  the  Customs  server  (ICEGATE),  it  is  indicated 
that  the  export  is  taking  place  under  the  DDS  and  the  DDS  amount  is  fixed 
irrevocably. After the shipping company has filed the Export General Manifest (EGM) 
and  the  Customs  office  has  satisfactorily  compared  that  document  with  the  shipping 
bill data, all conditions are fulfilled to authorise the payment of the drawback amount 
by either direct payment on the exporter's bank account or by draft.  

(62)  The exporter also has to produce evidence of realisation of export proceeds by means 
of  a  Bank  Realisation  Certificate  (BRC).  This  document  can  be  provided  after  the 
drawback  amount  has  been  paid  but  the  GOI  will  recover  the  paid  amount  if  the 
exporter fails to submit the BRC within a given delay.  

(63)  The drawback amount can be used for any purpose.  

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(64) 

It was found that in accordance with Indian accounting standards, the duty drawback 
amount can be booked on an accrual basis as income in the commercial accounts, upon 
fulfilment of the export obligation. 

(65)  The sampled companies were found to use the DDS during the last quarter of the RIP. 

(d)  Conclusion on DDS 

(66)  The DDS provides subsidies within the meaning of Article 3(1)(a)(ii) and Article 3(2) 
of  the  basic  Regulation.  A  duty  drawback  amount  is  a  financial  contribution  by  the 
GOI.  In  addition,  the  duty  drawback  amount  confers  a  benefit  upon  the  exporter, 
because it improves its liquidity. 

(67)  Furthermore, the DDS 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.  

(68)  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.  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. 

(69)  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. Lastly, an exporter is eligible for the DDS 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 
DDS. 

(70)  This  is  confirmed  by  GOI's  circular  n°  24/2001  which  clearly  states  that  "[duty 
drawback  rates]  have  no  relation  to  the  actual  input  consumption  pattern  and  actual 
incidence suffered on inputs of a particular exporter or individual consignments […]" 
and  instructs  regional  authorities  that  "no  evidence  of  actual  duties  suffered  on 
imported  or  indigenous  nature  of  inputs  […]  should  be  insisted  upon  by  the  field 
formations along with the [drawback claim] filed by exporters". 

(71) 

In view of the above, it is concluded that DDS is countervailable. 

(e)  Calculation of the subsidy amount 

(72) 

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  time  when  an 
export transaction is made under this scheme. At this moment, the GOI is liable to the 
payment of the drawback amount, which constitutes a financial contribution within the 
meaning  of  Article  3(1)(a)(ii)  of  the  basic  Regulation.  Once  the  customs  authorities 
issue an export shipping bill which shows, inter alia, the amount of drawback which is 
to be granted for that export transaction, the GOI has no discretion as to whether or not 
to grant the subsidy. In the light of the above, it is considered appropriate to assess the 
benefit under the DDS as being the sums of the drawback amounts earned on export 
transactions made under this scheme during the RIP. 

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(73)  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. In accordance with Article 7(2) of 
the basic Regulation these subsidy amounts have been allocated over the total export 
turnover  of  the  product  concerned  during  the  review  investigation  period  as 
appropriate denominator, because the subsidy is contingent upon export performance 
and it was not granted by reference to the quantities manufactured, produced, exported 
or transported.  

(74)  Based  on  the  above,  the  subsidy  rates  established  in  respect  of  this  scheme  for  the 

sampled companies concerned amounted to 1.65% and 1.32%, respectively. 

4. 

Focus Market Scheme (FMS) 

(a)  Legal basis 

(75)  The detailed description of FMS is contained in paragraph 3.14 of FTP 09-14 and in 

paragraph 3.8 of HOP I 09-14. 

(b)  Eligibility 

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

(c) 

 Practical implementation 

(77)  Under this scheme exports of all products to countries notified under tables 1 and 2 of 
Appendix  37(C)  of  HOP  I  09-14  are  entitled  to  duty  credit  equivalent  to  3%  of  the 
FOB  value.  As  of  1  April  2011,  exports  of  all  products  to  countries  notified  under 
table  3  of  Appendix  37(C)  ('Special  Focus  Markets')  are  entitled  to  a  duty  credit 
equivalent  to  4%  of  the  FOB  value.  Certain  types  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.  

(78)  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. 

(79)  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. 

(80) 

It was found that the sampled companies used this scheme during the RIP. 

(d)  Conclusion on FMS 

(81)  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.  

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(82)  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. 

(83)  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. 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 

(84)  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 
cooperating  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 
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. 

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

companies concerned amounted to respectively 0.19% and 0.87%. 

5. 

Status Holder Incentive Scrip (SHIS) 

(a)  Legal basis 

(86)  The  detailed  description  of  SHIS  is  contained  in  chapter  3.16  of  FTP  09-14  and  in 
paragraph  3.10  of  HOP  I  09-14.  The  detailed  description  of  the  Status  categories  is 
contained in paragraphs 3.10.1 to 3.10.4 of FTP 09-14 and in paragraphs 3.1 to 3.5 of 
HOP I 09-14. 

(b)  Eligibility 

(87)  Manufacturer-exporters  or  merchant-exporters  which  are  recognised  as  so-called 

Status holders are eligible for this scheme.  

(c)  Practical implementation 

(88)  Merchant as well as manufacturer exporters are eligible for Status. Depending on their 
export performance during current year plus a number of previous years, applicants are 

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granted  one  of  the  following  statuses:  Export  House,  Star  Export  House,  Trading 
House, Start Trading House, Premier Trading House. 

(89)  Under  the  SHIS,  status  holders  are  entitled  to  a  duty  credit  equivalent  to  1%  of  the 
FOB value of exports in sectors specified in paragraph 3.16.4 of FTP 09-14 i.e. leather 
(excluding  finished  leather),  textile  and  jute  sector,  handicrafts,  engineering  sector 
(excluding some sub-sectors), plastics and basic chemicals (excluding pharmaceutical 
products). The product concerned, being a type of plastic, is covered by the scheme. 

(90)  The SHIS duty credits are not transferrable and must be used to pay duty on import of 

capital goods used to manufacture products falling into one of the covered sectors. 

(91) 

In case an applicant has availed Zero Duty EPCG during a year, it shall not be eligible 
for SHIS for export made that year. 

(92)  The  scheme  was  introduced  in  2009  for  exports  made  during  2009-2010  and  2010-
2011  and  has  been  extended  on  a  yearly  basis  since  then.  The  last  extension  (cfr. 
notification No 07/2012 – Customs dated 9 March 2012) prolonged the validity of the 
scheme until 31 March 2013. 

(93) 

It was found that in accordance with Indian accounting standards, the SHIS duty credit 
can  be  booked  on  an  accrual  basis  as  income  in  the  commercial  accounts,  upon 
fulfilment of the export obligation. 

(94)  The investigation revealed that one sampled company used this scheme during the RIP 
while  the  other  one  was  not  eligible  as  a  result  of  the  provision  described  in  recital 
(90). 

(d)  Conclusion on SHIS 

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

(96)  Furthermore,  SHIS  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. 

(97)  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. 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.  The  duty  credit  will  eventually  be  used  to  pay  duties  on 
imports  of  capital  goods  which  are  not  covered  by  the  scope  of  permissible  duty 
drawback 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 

(98)  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 
cooperating exporting producer on an accrual basis as income at the stage of the 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 

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performance  and  it  was  not  granted  by  reference  to  the  quantities  manufactured, 
produced, exported or transported. 

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

sampled company using that scheme amounted to 1%. 

6. 

Export Promotion Capital Goods scheme (‘EPCGS’) 

(a)  Legal basis 

(100)  The detailed description of EPCGS is contained in chapter 5 of FTP 09-14 as well as 

in chapter 5 of HOP I 09-14.  

(b)  Eligibility 

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

service providers are eligible for this scheme.  

(c)  Practical implementation 

(102)  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  3%  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 a 0% 
duty rate under the EPCGS but in such case the time period for fulfilment of the export 
obligation is shorter. 

(103)  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. 

(d)  Conclusion on EPCGS 

(104)  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. 

(105)  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.  

(106)  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  point  (i),  of  the  basic  Regulation,  because  they  are  not  consumed  in  the 
production of the exported products. 

(e)  Calculation of the subsidy amount  

(107)  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 

EN 

19 

   EN 

across a period which reflects the normal depreciation period of such capital goods in 
the industry concerned. The amount so calculated, which is attributable to the RIP, has 
been adjusted by adding interest during this period in order to reflect the full value of 
the benefit over time. The commercial interest rate during the investigation period in 
India was considered appropriate for this purpose. Where justified claims were made, 
fees  necessarily  incurred  to  obtain  the  subsidy  were  deducted  in  accordance  with 
Article 7(1)(a) of the basic Regulation. 

(108)  In accordance with Article 7(2) and 7(3) of the basic Regulation, this subsidy amount 
has  been  allocated  over  the  appropriate  export  turnover  during  the  RIP  as  the 
appropriate  denominator  because  the  subsidy  is  contingent  upon  export  performance 
and was not granted by reference to the quantities manufactured, produced, exported 
or transported. 

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

companies concerned amounted to respectively 0.55% and 0.56%. 

7. 

Advance Authorisation Scheme ('AAS') 

(110)  It was found that only one sampled company availed of this scheme during the RIP. 
However, the investigation established that the benefit obtained by the company was 
insignificant and, thus AAS was not analysed further. 

8. 

West Bengal Incentive Scheme 1999 ('WBIS 1999') 

(a) 

 Legal basis 

(111)  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  June  1999  of  the  GOWB 
Commerce & Industries Department. 

(b)  Eligibility 

(112)  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 

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

(114)  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. 

(115)  It was found that one sampled company availed of this scheme during the RIP. 

(d)  Conclusion 

EN 

20 

   EN 

(116)  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 CST exemption and CENVAT remission on sales of 
finished goods, decrease tax revenue which would be otherwise due. In addition, these 
incentives  confer  a  benefit  upon  a  company,  because  they  improve  its  financial 
situation since taxes otherwise due are not paid. 

(117)  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. 

(118)  The WBIS 1999 is therefore countervailable. 

(e)  Calculation of the subsidy amount 

(119)  The  subsidy  amount  was  calculated  on  the  basis  of  the  amount  of  the  sales  tax  and 
CENVAT  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 1,36%.  

9. 

Amount of countervailable subsidies 

(120)  The amount of countervailable subsidies in accordance with the provisions of the basic 
Regulation,  expressed  ad  valorem,  for  the  sampled  exporting  producers  was  7.53% 
and 8.17%, respectively. 

SCHEME 

DEPB  DDS 

FMS 

SHIS 

EPCGS  WBIS 

Total 

COMPANY 

% 

% 

% 

3.78  

1.65 

0.19 

% 

nil 

% 

% 

% 

0.55 

1.36 

7.53 

Dhunseri 
Petrochem & Tea 
Limited 

Reliance Industries 
Limited 

4.42 

1.32 

0.87 

1.0 

0.56 

Nil 

8.17 

10. 

Conclusions on the likelihood of a continuation or recurrence of subsidisation 

(121)  In accordance with Article 18(2) of the basic Regulation, it was examined whether the 
expiry of the measures in force would be likely to lead to a continuation or recurrence 
of subsidisation. 

(122)  As  set  out  under  recitals  (26)  to  (118)  above,  it  was  established  that  during  the  RIP 
Indian  exporters  of  the  product  concerned  continued  to  benefit  from  countervailable 
subsidisation by the Indian authorities.  

(123)  The  subsidy  schemes  give  recurring  benefits  and  there  is  no  indication  that  these 
benefits  will  be  phased  out  in  the  foreseeable  future.  Moreover,  each  exporter  is 
eligible to several of the subsidy schemes.  

EN 

21 

   EN 

(124)  It  was  also  examined  whether  exports  to  the  Union  would  be  made  in  significant 

volumes should the measures be lifted.  

(125)  India  is  a  large  producer  of  the  product  concerned.  On  the  basis  of  data  collected 
during  the  investigation,  India  had  a  production  capacity  of  about  700,000-900,000 
tonnes  during  the  RIP  and  expansion  plans  bringing  the  total  country  capacity  to 
1,600,000  –  1,800,000  tonnes  by  2014.  As  a  result,  the  excess  of  capacity  over 
domestic demand is estimated to reach about 600,000-700,000 tonnes in 2014, which 
would represent 21-25% of the total Union consumption in RIP. 

(126)  Under  these  circumstances,  Indian  producers  of  the  product  concerned  are  heavily 
dependent on export sales and there is a likelihood that exports volumes to the Union, 
which were already significant during the RIP, would increase should the measures be 
repealed.  

(127)  An exporting producer submitted that the excess capacity would decrease after 2014 
and  therefore  the  excess  capacity  situation  would  only  be  temporary.  It  is  noted  that 
the  alleged  decrease  of  excess  capacity  after  2014  was  found  in  line  with  the 
projections  of  the  market  intelligence  report  Therefore  it  was  concluded  that  this 
submission was not of a nature to modify the analysis with regard to the development 
of excess capacities. 

(128)  After  the  disclosure,  an  exporting  producer  claimed  that  important  temporary  excess 
capacities were inevitable due to the fact that generally production capacity increases 
can be done only in large increments due to the minimum size of modern PET plants. 
In reply to this it should be noted that during RIP and the following year, production 
capacity extensions in the range of at least 150,000 to 200,000 tonnes were made. It 
follows that the invoked reasoning cannot justify alone the excess capacity available 
for exports quoted in recital (125). In any event, in this context the cause of the excess 
capacity available for exports is irrelevant. Therefore the claim was rejected.  

(129)  Some parties claimed that the excess capacity available for exports developing in India 
could be absorbed also by other third countries and that therefore the excess capacity 
available  for  exports  as  calculated  by  the  Commission  was  not  properly  assessed.  It 
was  not  assume  in  any  way  that  the  entirety  of  any  excess  capacity  available  for 
exports would be directed to the Union. Therefore the claim was rejected.  

(130)  In view of the above, it can be concluded that there is a likelihood of a continuation of 

subsidisation. 

EN 

22 

   EN 

D. DEFINITION OF THE UNION INDUSTRY 

1. 

Union production and Union industry 

(131)  The like product is manufactured by 13 known producers in the Union. They represent 
the  Union  industry  within  the  meaning  of  Articles  9(1)  of  the  basic  Regulation  and 
will thereafter be referred as 'the Union industry'. 

(132)  Twelve known Union producers, represented by the complainant in the present case, 
cooperated and supported the investigation. One more known Union producer did not 
cooperate in the present review.  

(133)  All  available  information  concerning  Union  industry,  such  as  questionnaire  replies, 
Eurostat  and  request  for  review,  was  used  in  order  to  establish  the  total  Union 
production for the RIP. 

(134)  The Union market for PET is characterised by a relatively high number of producers, 
belonging  usually  to  bigger  groups  with  headquarters  outside  the  Union.  Between 
2000 and 2012 the Union PET industry has undergone through several transitions. The 
market is in a process of consolidation with a number of recent takeovers and closures. 
New products, such as recycled PET and bio PET continue to be developed together 
with a relatively recent spinoff of a recycling industry. 

(135)  Following  the  disclosure  some  parties  argued  that  the  description  of  the  situation  of 
the  Union  industry  was  inaccurate  as  five  producers  were  in  fact  belonging  to  one 
large transnational group and another three producers were related to PET packaging 
companies.  None  of  these  facts  contradict  the  description  provided  in  recital  (134) 
explicitly  stating  that  the  Union  producers  are  usually  belonging  to  bigger  groups  as 
disclosed.  The  impact  of  this  concentration  is  addressed  in  recital  (207)  below.  The 
assessment  of  the  impact  of  captive  market  is  analysed  in  recitals  (202)  to  (204) 
below. 

(136)  As indicated above, given the relatively high number of cooperating Union producers 
a  sample  of  four  Union  producers  was  selected,  representing  over  50%  of  the 
production and sales of the total Union production of the like product in the RIP.  

E. SITUATION ON THE UNION MARKET 

1. 

Union Consumption 

(137)  Union  consumption  was  established  on  the  basis  of  the  sales  volumes  of  the  Union 
industry  on  the  Union  market,  the  import  volumes  data  obtained  from  Eurostat  and, 
concerning the non-cooperating Union producer, from estimations based on the review 
request. 

(138)  After an initial increase in 2009 and 2010, the consumption showed a slight decrease 

of 2% in the RIP as compared to 2008, totalling to 2,802 million tonnes in the RIP. 

Table 1 
Consumption 

2008 

2009 

2010 

RIP 

Volume (tonnes) 
Consumption 
Index 

2,868,775 

2,934,283 

2,919,404  2,802,066  

100  

102  

102  

98  

Source: Questionnaire replies, Eurostat and review request 

EN 

23 

   EN 

 
  
  
  
  
  
  
2. 

Volume, market share and prices of imports from India  

(139)  Despite  the  measures  in  place,  the  imports  from  India  more  than  doubled  over  the 
period considered departing from 46,313 tonnes in 2008 and reaching 96,678 tonnes in 
the RIP.  

(140)  The  market  share  of  India  rose  accordingly  from  1.6%  in  2008  to  3.5%  in  the  RIP, 
reaching  a  level  significantly  above  the  market  share  established  in  the  last  expiry 
review (0.3%).  

(141)  The  average  price  stood  at  1,285  EUR/tonne  in  the  RIP.  This  reflects  a  22%  price 
increase  over  the  period  considered,  which  was  acquired  in  the  RIP  after  an  initial 
decline of 21% in 2009.  

Table 2 
Imports from India 

2008 

2009 

2010 

RIP 

46,313
100
1,054
100
1.6%

44,482
96
834
79
1.5%

83,691 
181 
1,031 
98 
2.9% 

96,678
209
1,285
122
3.5%

Volume of imports (tonnes) 
Index (2008=100) 
Average price 
Index (2008=100) 
Market share of imports  
Source: Eurostat  

3. 

Imports from other third countries 

(a) 

Imports from Thailand, Taiwan, Malaysia, Indonesia 

(142)  As  mentioned  above,  an  anti-dumping  expiry  review  concerning imports  from  India, 
Indonesia,  Malaysia,  Taiwan  and  Thailand  was  conducted  in  parallel  to  the  present 
investigation.  

(143)  Imports  from  Indonesia,  Malaysia,  Taiwan  and  Thailand  increased  by  56%  over  the 
period considered despite a decline of 59% until 2010. Nevertheless, the total import 
volumes remained below de minimis level. 

(144)  The respective market share increased accordingly from 0.7% in 2008 to 1.1% in the 

RIP.  

(145)  The average price amounted to 1,310/EUR/tonne in the RIP, 1.5% below the average 
unit  price  of  the  Union  industry.  This  reflects  a  27%  price  increase  over  the  period 
considered, which was acquired in the RIP after an initial decline of 18% in 2009. 

Table 3 
Imports from Indonesia, Malaysia, Taiwan and Thailand 

2008 

2009 

2010 

RIP 

Volume of imports from 
Indonesia, Malaysia, Taiwan and 
Thailand (tonnes) 
Index (2008 = 100) 

19,078

12,127

7,762 

29,836

100

64

41 

156

EN 

24 

   EN 

 
  
 
  
Market share of imports from 
Indonesia, Malaysia, Taiwan and 
Thailand 

Index (2008 = 100) 

Price of imports (EUR/tonne) 

Index (2008 = 100) 
Source: Eurostat  

0.7%

0.4%

0.3% 

1.1%

100

1,030

100

62

843

82

40 

1,055 

102 

160

1,310

127

(b) 

Imports from China, United Arab Emirates (UAE), Iran and Pakistan  

(146)  Imports from other third countries with anti-dumping measures in place decreased by 
69% over the period considered after an increase of 49% in 2009. Only imports from 
China remained stable.  

(147)  The market share of the countries in question decreased from 8.2% in 2008 to 2.6% in 

the RIP, including mainly the UAE (1.7% in RIP) and China (0.6% in RIP). 

(148)  The average price amounted to 1,258 EUR/tonne in the RIP, 5.5% below the average 
unit  price  of  the  Union  industry.  This  reflects  a  24%  increase  over  the  period 
considered which was acquired in the RIP after an initial decline of 22% in 2009. 

Table 4 
Imports from China, the UAE, Iran and Pakistan 

Volume of imports from China, the 
UAE, Iran and Pakistan (tonnes) 

235,913

351,798

188,776 

72,054

2008 

2009 

2010 

RIP 

Index (2008 = 100) 

100

149

80 

31

Market share of imports from China, the 
UAE, Iran and Pakistan  

8.2%

12.0%

6.5% 

2.6%

Index (2008 = 100) 

Price of imports (EUR/tonne) 

Index (2008 = 100) 

Source: Eurostat  

100

1,016

100

146 

789

78

79  

949 

93 

31 

1,258

124

(c) 

Imports from other third countries without any measures  

(149)  Volumes of imports from other third countries without any measures including Oman, 
South  Korea,  Russia,  Mexico  and  Saudi  Arabia  increased  by  59%  over  the  period 
considered, after a growth of 71% in 2009. Between 2009 and the RIP, Oman became 
the largest exporting country in the Union.  

(150)  The market share of the countries in question rose from 9.7% in 2008 to 15.8% in the 
RIP, mainly due to the gain of 4.3% of imports from Oman. The market share of South 
Korea stood at 4% in the RIP, 5% below its highest level reached in 2009.  

(151)  The average price amounted to 1,273 EUR/tonne, 4.3% below the average unit price 
of the Union industry. This reflects a 10% increase over the period considered which 

EN 

25 

   EN 

 
  
 
  
  
  
  
was  acquired  in  2010  and  in  the  RIP  after  an  initial  decline  of  24%  in  2009.  The 
average  price  of  imports  from  Oman  stood  at  1,310  EUR/tonne  in  the  RIP,  1.5% 
below the average unit price of the Union industry. The average price of imports from 
South  Korea  stood  at  1,294  EUR/tonne,  2.7%  below  the  average  unit  price  of  the 
Union industry.  

Table 5 
Imports from other third countries 

Volume of imports from other third 
countries (tonnes) 
Index (2008 = 100) 

Market share of imports from other third 
countries 

Index (2008 = 100) 

Price of imports (EUR/tonne) 

Index (2008 = 100) 
Main exporters (tonnes) 
Oman 
South Korea 
Russia 
Mexico 
Saudi Arabia 
Others 

Source: Eurostat  

2008 

2009 

2010 

RIP 

279,188

478,570

469,753 

442,692

100

171

168 

159

9.7%

16.3%

16.1% 

15.8%

100

1,156

100

168 

879

76

165  

997 

86 

0
177,341
546
2,650
230
98,422

52,632
254,451
546
1,879
20,454
148,609

95,646 
183,801 
3 
29,039 
50,108 
111,156 

162 

1,273

110

120,286
114,346
50,427
29,409
24,756
103,468

4. 

Economic situation of the Union industry  

(152)  Pursuant  to  Article  8(4)  of  the  basic  Regulation  all  economic  factors  and  indices 
having a bearing on the state of the Union industry during the period considered have 
been examined. 

(153)  For  the  purpose  of  the  injury  analysis,  the  injury  indicators  have  been  established  at 

the following two levels 

– 

– 

the  macro-economic  indicators  (production,  production  capacity,  capacity 
utilisation,  sales  volume,  market  share,  growth,  employment,  productivity, 
magnitude  of  subsidy  margins  and  recovery  from  the  effects  of  past 
subsidisation) were assessed at the level of the whole Union production for all 
Union  producers,  on  the  basis  of  the  information  collected  from  the  Union 
industry, the review request as well as publicly-available statistics; 

micro-economic  indicators  (stocks,  average  unit  prices,  wages,  profitability, 
return on investments, cash flow, ability to raise capital and investments) was 
carried  out  for  the  sampled  Union  producers  on  the  basis  of  the  information 
they submitted.  

(154)  One  sampled  Union  producer  divested  one  of  its  production  facilities  in  June  2010. 
The  latter  was  acquired  by  another  Union  producer.  Since  the  analysis  of  macro-

EN 

26 

   EN 

 
  
economic  indicators  is  based  on  data  collected  from  all  Union  producers  the 
divestment had no impact on the scope or individual indicators of the injury analysis.  

(155)  As  a  preliminary  point  to  the  analysis  it  should  be  explained  that  certain  global 
economic  events  in  late  2010  and  early  2011  had  an  impact  on  the  situation  on  the 
Union market, in particular on the prices and sales volumes of the like product. In this 
period  the  cotton  supply  fell  resulting  in  an  increased  demand  for  polyester  fibre  on 
the Asian market. PET and polyester fibre are largely dependent upstream on the same 
raw material, i.e. purified terephthalic acid (PTA). The increased demand for polyester 
fibre resulted in insufficient supply of PTA, pushing the prices of PET up. Since the 
producers  of  PET  in  the  Middle  East  also  depend  on  PTA  from  Asia,  this  caused 
sudden fall in imports of PET in the Union. At the same time, the main PTA suppliers 
in  the  Union  declared  a  'force  majeure'  resulting  in  additional  restrictions  of  the 
domestic PET production. 

4.1. 

Comments of the parties 

(156)  Some parties challenged the validity of the injury analysis on the grounds that it was 
based  on  deficient  information,  which  in  turn  also  affected  the  rights  of  defence  of 
interested parties. In particular, the below-mentioned arguments were raised. 

(157)  Some  parties  claimed  that  the  information  collected  from  Union  producers  did  not 
comply with the instructions for completion of the questionnaire, which requested data 
from  different  companies  not  to  be  aggregated.  It  was  therefore  claimed  that  the 
collected  information  was  inaccurate  and  incomplete  given  that  the  reported  figures 
were  aggregated  per  sampled  entity.  It  is  to  be  noted  that  the  information  was  duly 
collected  and  verified  on-spot.  The  information  collected  was  found  to  provide 
sufficiently accurate picture of the Union industry and therefore the above-mentioned 
claim  had  to  be  rejected.  Following  disclosure  the  parties  reiterated  their  claim.  No 
new arguments or evidence were presented. Same parties reiterated their claim that the 
data provided by one sampled company were incomplete as they did not relate to the 
entire group but selected entity within the group. This comment was addressed at the 
sampling stage as explained in recital (18) above. 

(158)  The  same  parties  argued  that  the  Commission  attempted  to  fix  the  claimed 
insufficiencies  of  the  collected  information  by  sending  additional  questionnaires.  In 
this  respect  it  should  be  clarified  that  the  Commission  indeed  sent  additional 
questionnaires, but addressed them only to the non-sampled Union producers in order 
to collect information on macro-economic indicators relevant to the injury assessment 
therefore this was done to supplement the information provided by the sampled Union 
producers. Following disclosure some parties reiterated the claim without bringing any 
new  arguments  or  presenting  new  evidence.  The  claim  of  the  parties  had  to  be 
therefore dismissed.  

(159)  In  addition,  the  same  parties  also  claimed  that  the  information  provided  by  the 
sampled  producers  was  contrary  to  the  obligations  in  Article  29  of  the  basic 
Regulation  because  information  which  was  not  confidential  in  nature  had  been 
provided  as  confidential  information  and  thus  excluded  from  the  open  file.  In  this 
respect it is to be noted that the information was classified as limited in line with the 
request  of  the  submitting  party.  Upon  the  request  of  the  parties  the  confidentiality 
status  of  the  submitted  information  was  reconsidered  and,  where  appropriate,  the 
information was reclassified as open for inspection by interested parties after approval 
by the companies concerned. Also this claim was therefore dismissed. 

EN 

27 

   EN 

4.2. 

Macro-economic indicators 

(a)  Production 

(160)  In line with the loss of market share by the Union industry (discussed in recital (164) 
below)  the  Union  production  decreased  by  11%  between  2008  and  the  RIP.  The 
decline  of  the  Union  production  was  only  interrupted  in  2010  when  it  raised  in 
comparison to 2009 but remained nevertheless 4% below its level of 2008. It further 
decreased in the RIP. 

Table 6 
Total Union production 

2008 

2009 

2010 

RIP 

Production (tonnes) 
Index (2008=100) 
Source: Questionnaire replies, review request 

2,327,169 
100 

2,107,792
91 

2,239,313  
96  

2,068,717 
89 

(b)  Production capacity and capacity utilisation 

(161)  The  production  capacity  of  the  Union industry  decreased  by  23%  between  2008  and 
the RIP. This trend relates to the closure of several manufacturing facilities which was 
partly offset by the launch of new factories.  

(162)  Capacity utilisation increased from 75% in 2008 to 86% in the RIP. Increased capacity 
utilisation is to be seen in the context of the restructuring efforts of the Union industry 
explained in recital (134) above.  

Table 7 
Production capacity and capacity utilisation 

2008 

2009 

2010 

RIP 

Production capacity (tonnes) 
Index  
Capacity utilisation 
Index 
Source: Questionnaire replies, review request 

3,118,060 
100 
75%
100 

(c)  Sales volume 

2,720,326
87 
77%
104 

2,625,244  
84  
85% 
114  

2,393,516 
77 
86%
116 

(163)  The  sales  volume  of  the  Union  industry  on  the  Union  market  followed  the  same 
development as production, with a contraction of 6% over the period considered.  

Table 8 
Total sales of the Union industry in the Union 

2008 

2009 

2010 

RIP 

Sales (tonnes) 
Index  

2,288,283 
100 

2,047,305 
89 

2,169,423  
95  

2,160,807 
94 

Source: Questionnaire replies, review request 

(d)  Market share 

(164)  After an initial drop of 13% in 2009, the Union industry regained part of the market 
share  lost  by  UAE,  South  Korea,  Iran  and  Pakistan  despite  increasing  volumes  of 

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imports  from  India,  Oman  and  other  third  countries  (Russia,  Mexico  and  Saudi 
Arabia) over the same period. Overall, the market share of the Union industry declined 
by 3% during the period considered.  

Table 9 
Union industry market share 

2008 

2009 

2010 

RIP 

Union industry market 
share 
Index  
Source: Questionnaire replies, review request and Eurostat  

80%
100 

(e)  Growth 

70%
87 

74% 
93 

77%
97 

(165)  The market stagnated over the period considered. There was no growth for the Union 
industry  to  benefit  from,  on  the  contrary,  despite  the  restructuring  efforts,  the  Union 
industry  lost  further  market  share  to  the  growing  imports,  in  particular,  from  the 
countries without any measures. The slight decline of the consumption the RIP is to be 
seen  against  the  background  of  temporary  shortage  of  the  raw  material  (PTA)  in  the 
Union as well as in the global market. 

(f)  Employment and productivity 

(166)  The employment level of the Union industry showed a decrease of 41% between 2008 
and the RIP. The decline was constant over the period concerned, including in 2010 
when  the  production  increased  (see  recital  (160)  above).  In  the  light  of  the  growing 
productivity, this drop is a reflection of the restructuring efforts by a number of Union 
producers. 

(167)  Productivity  of  the  Union  industry’s  workforce,  measured  as  output  (tonnes)  per 
person employed per year, increased by 50% in the period considered. This reflects the 
fact  that  production  decreased  at  a  slower  pace  than  the  employment  level  and  is  an 
indication of increased efficiency of the Union industry. This is particularly evident in 
2010  when  production  increased  while  the  employment  level  decreased  and  the 
productivity was 37% higher than in 2008. 

Table 10 
Employment and productivity 

Number of employees 
Index  

Productivity (tonne/employee) 
Index  

2008 

2009 

2010 

RIP 

2,060 
100 

1,130 
100 

1,629 
79 

1,294 
115 

1,449  
70  

1,545  
137  

1,218 
59 

1,698 
150 

Source: Questionnaire replies, review request 

(g)  Magnitude of the actual margin of subsidy 

(168)  As concerns the impact on the Union industry of the magnitude of the actual margin of 
subsidy  of  Indian  imports,  given  the  price  sensitivity  of  the  market  for  this  product, 
this impact cannot be considered to be negligible. It should be noted that this indicator 
is  more  relevant  in  the  context  of  the  likelihood  of  recurrence  of  injury  analysis. 
Should  measures  lapse,  it  is  likely  that  subsidised  imports  would  come  back  at  such 

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volumes and prices that the impact of the magnitude of the subsidy margin would be 
significant. 

(h)  Recovery from the effects of past subsidisation 

(169)  While  the  indicators  examined  above  show  an  improvement  in  some  economic 
indicators of the Union industry, further to the imposition of definitive countervailing 
measures  in  2001,  they  also  provide  evidence  that  the  Union  industry  is  still 
vulnerable. 

4.3. 

Micro-economic indicators 

(a)  Stocks 

(170)  The  level  of  stocks  was  24%  higher  in  the  RIP  in  relation  with  their  levels  in  2008. 
However, the stocks have remained at previously established levels in relation to the 
output, i.e. between 5% and 6%. 

Table 11 
Stocks 

2008 

2009 

2010 

RIP 

51,495 
100 

54,808 
106

54,314  
105 

64,069 
124 

Closing stocks 
Index  
Source: Questionnaire replies  

(b)  Price development 

(171)  As regards the price development, after an initial drop in 2009 (-16%), mainly caused 
by the economic crisis, the prices came close to 2008 level in 2010. This was followed 
by  a  sharp  rise  of  the  average  unit  price  in  the  RIP,  bringing  the  increase  over  the 
period considered to 25%.  

(172)  The sudden price increase in the RIP should be read in the context of the unexpected 
market developments at the end of 2010 and in the first quarter of 2011 on the cotton 
market.  As  mentioned  above  (recital  (155)  above),  the  record  cotton  prices  caused  a 
switch  to  polyester  fibre  that  competes  for  the  same  raw  material  as  PET.  The 
increased  demand  for  the  raw  material,  in  particular,  PTA,  pushed  up  the  prices  of 
PET  in  Asia  and  Middle  East  with  a  spill  over  effect  on  the  prices  of  PET  in  the 
Union. The price increase in the Union at that time was further amplified by the short 
term scarcity of PTA in the Union due to the declared force majeure of one of the PTA 
producers in the Union.  

Table 12 
Unit Sales Price in the Union 

Unit Sales Price in the Union 
(EUR/tonne) 

Index (2008 = 100) 
Source: Questionnaire replies 

(c)  Factors affecting sales prices 

2008 

2009 

2010 

RIP 

1,066 

100

891 

84 

1,045  

1,330 

98  

125 

(173)  The  sales  prices  of  PET  normally  follow  the  price  trends  of  its  main  raw  materials 
(mainly PTA and monoethylene glycol — MEG) as they constitute up to 90% of the 

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total cost of PET. PTA is an oil derivative, the price of which fluctuates on the basis of 
the price of crude oil. This causes high volatility of the prices of PET. 

(174)  In  addition,  PET  competes  for  the  same  raw  material  with  polyester  fibre,  the 
production of which relies to the same extent as PET on the availability of PTA. Since 
polyester fibre is an alternative to cotton for the textile industry, the price of PET is 
therefore also sensitive to the developments on the cotton market. 

(d)  Wages 

(175)  The  average  wages  declined  by  7%  over  the  period  considered.  This  reduction 
occurred in the RIP and amplified the productivity gains observed above (see recital 
(167) above).  

Table 13 
Wages 

Wages (average per person) 
Index  
Source: Questionnaire replies  

2008 

2009 

2010 

RIP 

54,512 
100 

56,014 
103 

54,876  
101  

50,784 
 93 

(e)  Profitability and return on investment 

(176)  The profitability and returns on investment improved significantly between 2008 and 
the RIP. The profit on sales in the Union market increased from -7.9% in 2008 to 5.3% 
in the RIP, while return on investment improved from -9.6% to 10.6%. The year 2008 
was  affected  by  the  particularly  poor  performance  of  one  Union  producer. 
Nevertheless, the improvement of the financial situation of the Union industry in 2009 
and 2010, when prices were below their 2008 levels, evidences the loose relationship 
between  prices  and  profitability.  On  the  contrary,  the  improvement  of  profitability 
appears  closely  correlated  to  the  improvements  in  capacity  utilisation  and  to  the 
productivity gains observed above.  

(177)  Thanks to the global market developments at the break of 2010/2011, coupled with the 
restructuring efforts and efficiency gains described above, the Union industry was able 
to improve its profitability in 2010 and to reach the level of 5.3% in the RIP.  

(178)  One interested party argued that this development was unexpected and extraordinary, 
not to be considered representative of the overall situation of the Union industry.  

(179)  In  this  respect  it  is  to  be  noted  that  the  Union  industry  was  able  to  benefit  from  the 
PET price increase at the end of 2011 and beginning of 2012 as it had fixed the PTA 
price  before  the  described  market  events  occurred.  Based  on  the  statistical  sources 
concerning the post-RIP development, submitted by the parties, the profit margins of 
PET producers went substantially down in 2012. This confirms that the profitability in 
2011  (RIP)  was  indeed  largely  influenced  by  unexpected  and  temporary  global 
economic  events  (recital  (155))  that  are  unlikely  to  recur  and  cannot  be  considered 
permanent and representative of the situation of the Union industry.  

Table 14 
Profitability and Return on Investments 

Profitability Union 
sales 

2008 

2009 

2010 

RIP 

-7.9%

1.6%

4.8% 

5.3%

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Index  
Return on investment 
Index  

Source: Questionnaire replies  

100 
-9.6%
100 

(f)  Cash flow and ability to raise capital 

221 
2.3%
224 

261  
8.9% 
292  

267 
10.6%
310 

(180)  The cash flows improved significantly over the period considered reflecting the recent 

improvement of the profitability of the Union Industry.  

Table 15 
Cash flow 

Cash flow (EUR) 
Index (2008 = 100) 
In % of turnover 
Index (2008 = 100) 

Source: Questionnaire replies 

2008 

2009 

2010 

RIP 

- 59,419,394 
100 
-5.9%
100

40,940,883 
269 
4.5%
176

96,614,649  
363  
8.3% 
242 

103,761,169 
375 
7.5%
229 

(181)  There were no particular indications that the Union industry would have encountered 
difficulties in raising capital, mainly as the Union producers are incorporated in larger 
groups. 

(g) 

Investments 

(182)  The level of investments was overall reduced by 35% over the period considered. The 
initial  investments  made  in  2008  were  cut  sharply  in  2009  and  have  not  fully 
recovered since.  

Table 16 
Investments 

Investments (EUR '000) 
Index  

Source: Questionnaire replies 

2008 

72,341,598 
100 

2009 

5,404,705 
7 

2010 

RIP 

15,994,659   47,217,003 
65 

22  

5. 

Conclusion on the situation of the Union industry 

(183)  The analysis of the macro-economic data showed that the Union industry decreased its 
production  and  sales  volumes  during  the  period  considered.  The  Union  industry's 
market  share  has  not  fully recovered  since  the  initial  drop  in  2009  and  it  showed  an 
overall  decrease  of  3  percentage  points  over  the  period  considered  (to  77%  in  RIP). 
The decline in employment and capacity is a result of the on-going restructuring and is 
to be seen in the context of increasing capacity utilisation and productivity. 

(184)  At  the  same  time  most  of  the  relevant  micro-economic  indicators  showed  signs  of 
improvements. The profitability, return on investment and cash flow rose significantly, 
in particular in 2010 and in the RIP. The investments, on the other hand, plummeted in 
2009 and have not recovered since. 

(185)  Overall,  the  economic  situation  of  the  industry  has  improved.  However,  these 
improvements  are  relatively  recent  and  to  some  extent  based  on  unforeseen  and 
temporary  market  developments  at  the  break  of  2010/2011  (see  recital  (155)  above). 

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This appears to be supported by the information available on the developments of the 
margin of the Union industry in 2012 (see recital (179) above) that show a decline as 
compared to RIP.  

(186)  In view of the above analysis, the situation of the Union industry has improved and no 
material  injury  appears  to  be  taking  place.  Nevertheless,  despite  apparent  positive 
trends  and  the  significant  restructuring  efforts,  the  situation  of  the  Union  industry  is 
still fragile.  

(187)  Following the disclosure some parties contested the conclusion that the Union industry 
was  still  fragile  claiming  that  the  Union  industry  was  in  a  healthy  state  and  has 
substantially  transformed  since  1999.  It  is  noted  that  as  explained  above  (recital 
(184)), despite the overall improvement and consolidation, not all economic indicators 
developed  positively  over  the  period  considered.  For  example,  production  and  sales 
volumes  as  well  as  market  share  decreased.  Moreover,  the  improvements  were 
relatively recent and with a fall of profitability in 2012 appeared short-lived. On this 
basis it was considered that while no material injury proved to exist in RIP, the Union 
industry was still in a fragile state. The argument was therefore rejected. 

(188)  Following  the  disclosure  some  parties  contested  the  use  of  data  referring  to  period 
beyond  RIP  for  the  analysis  of  the  economic  situation  of  the  Union  industry.  In 
response  to  this  claim  it  is  confirmed  that  the  situation  of  the  Union  industry  was 
assessed for the period considered and on this basis no material injury was established. 
However, the development of profitability of the Union industry beyond RIP is in this 
case  relevant  mainly  in  the  context  of  the  extraordinary  nature  of  the  global  market 
developments at the break of 2010/2011. It also illustrates the volatility typical for this 
sector. The argument is therefore rejected. 

E. LIKELIHOOD OF RECURRENCE OF INJURY  

1. 

Impact  of  the  projected  volume  of  imports  and  price  effects  in  case  of  repeal  of 
measures 

(189)  The  investigation  has  shown  that  the  imports  from  India  continued  to  be  subsidised 
and  that  there  are  no  indications  that  the  subsidisation  would  be  reduced  or 
discontinued in the future.  

(190)  A prospective analysis of the likely import volumes in the Union from India revealed 
that, given the excess capacity available for exports (see recital (125) above), the price 
levels in the Union and the attractiveness of the Union market, the imports from India 
are likely  to  increase  to levels  above those reached  in  the  RIP,  if  the  measures  were 
repealed.  With  the  planned  capacity  expansions,  the  excess  capacity  available  for 
exports is estimated to reach about 600,000-700,000 tonnes in the near future, which 
would represent around 21-25% of the total Union consumption in RIP. 

(191)  Given the continuation of subsidisation, the prices of imports from India are expected 
to further decrease, should the measures against India be lifted. Also, as the exporters 
will have to compete against low priced imports from other countries, they are likely 
to lower their prices further in order to increase market share on the Union market. 

(192)  On  this  basis,  the  Union  industry  is  likely  to  be  exposed  to  substantial  volumes  of 
imports from India at subsidised prices below the average prices of the Union industry, 
undermining  the  recently  improved  economic  situation  of  the  latter.  As  a  result,  the 
material injury is likely to recur should the measures against India be lifted. 

2. 

Production capacity and excess capacity available for exports 

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33 

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(193)  As indicated above (see recital (125) above), the exporting producers in India have the 
potential to increase their export volumes to the Union market. India had a significant 
growth in its production capacity over the period considered (see recital (125) above). 
According to the information  available it is expected to  increase its  capacity  further, 
creating  a  gap  between  domestic  consumption  and  production  capacity  available  for 
exports of 600,000-700,000 tonnes in the near future. Such excess capacity available 
for exports has to be considered as significant as it represents around 21-25% of the 
current Union consumption in RIP.  

(194)  Therefore,  although  the  imports  to  the  Union  were  relatively  low,  they  more  than 
doubled  over  the  period  considered  and  there  is  a  risk  that  significant  exports  from 
India could be diverted to the Union. 

3. 

Loss of export markets 

(195)  Trade  defence  measures  are  currently  in  place  against  Indian  imports  in  Turkey  and 
South Africa. The consequent possible loss of these export markets for India is another 
indicator that the Union market is likely to be targeted if the measures were allowed to 
lapse.  

(196)  Following the disclosure some parties contested the conclusions regarding the loss of 
export  markets  for  India.  It  was  claimed  that  both  markets  were  marginal  export 
market,  therefore  no  significant  export  volumes  from  these  markets  could  be 
redirected to the Union if the measures were lifted. It is noted that only the existence 
of  the  trade  defence  on  some  markets  excludes  any  meaningful  comparison  of  the 
relative importance of the markets with and without measures for a given country. In 
addition,  contrary  to  the  claim,  it  was  not  considered  that  the  export  volumes  from 
India placed on these markets would be redirected to the Union market. Instead, it was 
considered  that  the  existence  of  the  trade  defence  measures  on  other  third  markets 
restricts  the  absorption  capacity  of  third  markets  as  regards  the  foreseen  increase  in 
excess capacities available for exports in India. This argument was therefore rejected.  

(197)  The existence of trade defence measures in third countries is also an indication that the 
pricing behaviour of Indian exports is likely to replicate on the Union market. 

4. 

Attractiveness of the Union market 

(198)  The  Union  PET  market  is  attractive  in  terms  of  its  size  and  prices,  being  the  third 
largest  market  in  the  world,  with  a  structural  need  for  imports  and  higher  prices  as 
compared to other markets. In the case of India, the import prices to the Union tend to 
be higher than the prices to other third countries, which points to the attractiveness of 
the  Union  market  for  the  Indian  exports.  This  is  well  illustrated  by  the  fact  that  the 
imports  from  India  have  doubled  over  the  period  considered  despite  the  measures  in 
force.  

(199)  The attractiveness of the Union market for exporters is also confirmed by the fact that 
the  Union  industry  continued  to  lose  market  share  to  the  rising  imports  from  the 
countries without measures. This is in particular true in the case of South Korea that 
significantly  increased  its  exports  to  the  Union  market  in  2012  after  the  measures 
against the country have expired.  

5. 

Other factors 

(200)  The impact of the imports from other third countries with measures on the situation of 
the  Union  industry  was  not  considered  significant,  due  to  the  relevant  low  import 
volumes and substantial decrease of their market share in the RIP.  

EN 

34 

   EN 

(201)  The  volume  of  imports  from  other  third  countries  without  any  measures  increased 
during the period considered, however, the respective average import price remained 
close to the Union industry average price. Therefore, the impact of the imports from 
these countries on the situation of the Union industry is considered limited.  

6. 

Captive market  

(202)  Following  the  disclosure  some  parties  claimed  that  due  to  the  vertical  integration 
between  PET  producers  and  converters,  a  considerable  part  of  PET  was  sold  for 
captive use that did not compete with imports. It was also claimed that share of captive 
market was significant, affecting the results of the analysis. 

(203)  Based  on  the  information  collected  at  the  level  of  sampled  Union  producers  the 
proportion of captive sales was found not to be significant (below 10%). It has to be 
underlined that the parties in question expressed the presence of PET producers in the 
packaging  business  in  terms  of  the  installed  production  capacity  of  PET  and  not  in 
terms  of  their  market  share  in  packaging.  Therefore,  the  claim  on  significant 
proportion of captive use was found unsubstantiated. As regards the price levels, the 
prices of related and unrelated sales were found to be within the same range.  

(204)  On these grounds it was concluded that the distinctive analysis of the impact of captive 

sales was not necessary and the claims of the parties were rejected.  

7. 

Comments of the parties 

(205)  Some parties argued that the injury due to imports from India did not exist during the 
RIP as evidenced by the relative economic health and profits of the Union industry. It 
has  to  be  note  that,  indeed,  no  continuation  of  injury  has  been  established  in  the 
present  case,  and  therefore  the  claim  of  the  parties  corresponds  to  the  investigation 
findings.  

(206)  Some parties claimed that other factors, such as structural inefficiencies of the Union 
industry and lack of investment as well as seasonal and conjunctural factors (e.g. bad 
weather, economic crises) could have an impact on the situation of the Union industry. 
Concerning the first point raised, it is to be noted that the restructuring of the Union 
industry  is  already  taking  place  and  the  efficiency  gains  obtained  suggest  that  the 
claim  of  the  parties  are  unfounded.  As  to  the  conjunctural  factors,  although  the 
economic crises did have an impact on the situation of the Union industry in 2009, as 
mentioned  above  (recital  (171)  above),  the  relevant  effects  do  not  appear  to  be 
currently  present  anymore.  Concerning  the  effect  of  bad  weather,  this  could  partly 
explain the shrinking consumption in the RIP, however, on the one hand,  its alleged 
impact  on  the  situation  of  the  Union  industry  has  not  been  substantiated  and,  on  the 
other hand, the slight drop in 2011 appears to be rather linked to temporary scarcity of 
raw materials due to the global market developments in 2011. Therefore, none of these 
claims is justified in view of the findings of the investigation. 

(207)  Furthermore, some parties argued that the recurrence of injury in this case is unlikely 
if  the  measures  were  to  expire,  given  that  thanks  to  its  structure  (concentration  and 
vertical  integration)  the  Union  industry  is  shielded  from  the  effects  of  the  imports. 
Moreover,  it  has  been  argued  that  a  shift  to  imported  PET  is  neither  desired  nor 
possible in the near future, in particular as purchasing contracts and policies as well as 
homologation  process  of  large  brand  owners  (downstream  users)  makes  changes  of 
PET  suppliers  cumbersome.  It  is  to  be  noted  that  based  on  the  findings  of  the 
investigation  the  Union  industry  continued  to  lose  market  share  to  the  benefit  of 
imports  during  the  period  considered;  this  shows,  on  the  one  hand,  that  the  Union 

EN 

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industry is not shielded from the effects of the imports and, on the other hand, that the 
switch  to  imports  is  not  hypothetical  but  is  actually  already  taking  place.  The 
arguments had to be therefore dismissed.  

(208)  Following the disclosure some parties reiterated the claim that the Union industry was 
shielded  from  the  potential  competition  of  imports  due  to  its  structure.  Firstly,  as 
regards the claim on dominant position of one of the producing groups in the Union 
market controlling five producers, it is noted that the Union market is an open market 
with  other  eight  producers  operating  outside  this  group  and  growing  competition  of 
imports  from  third  countries  –  with  and  without  any  measures  in  place.  Secondly, 
concentration  is  typical  for  this  type  of  business  based  on  commodity  product  that 
relies  on  economies  of  scale  for  its  competitiveness.  Thirdly,  no  price  leader  was 
found  to  exist  on  the  Union  market.  Finally,  parties  reiterated  that  the  impact  of  the 
imports  from  the  three  countries  concerned  in  the  light  of  the  vertical  integration  of 
some Union producers with the packaging industry or with producers of PTA was not 
analysed. As established in recital (205) above these aspects were indeed analysed and 
found unsubstantiated. Moreover, the verification of companies concerned by vertical 
integration  with  producers  of  raw  materials  confirmed  there  was  no  comparative 
advantage as the transfers were made at market price. Based on the above, the claim 
that the Union industry would be shielded from the competition was rejected.  

(209)  Last, some parties argued that no elements support a conclusion that the Indian export 
capacity  may  target  the  Union  market  at  ‘cheap  prices’  given  that  (i)  the  domestic 
demand in India is growing and is expected to continue to grow; (ii) PET in excess of 
domestic  consumption  exists,  yet  competition  in  export  markets  has  not  resulted  in 
exports  at  abnormally  low  prices;  (iii)  increases  in  production  capacity  in  Asia 
responds  to  the  increase  in  demand  expected  worldwide.  It  is  to  be  noted  that  the 
findings in the present investigation demonstrate that the projected growth of capacity 
shows a growing excess of the production capacity over domestic demand. In addition, 
the Indian prices on third markets were lower as compared to the Indian imports prices 
to  the  Union.  Based  on  the  findings  described  above  in  recitals  (189)  to  (199)  it  is 
likely  that  the  subsidised  Indian  imports  will  target  the  Union  market  at  substantial 
volumes and below the average price of the Union industry should the countervailing 
measures  be  allowed  to  lapse.  On  these  grounds  the  arguments  of  the  parties  are 
dismissed. 

8. 

Conclusion on the recurrence of injury 

(210)  On the basis of the foregoing it is concluded that it is likely that substantial volumes of 
subsidised  import  from  India  would  be  redirected  to  the  Union  should  the 
countervailing measures be repealed. Thanks to the continued subsidisation, the prices 
of the imports would most likely undercut the Union industry prices. Also, the prices 
of  these  imports  are  likely  to  decrease  even  further  should  the  Indian  exporting 
producers  try  to  increase  their  market  shares.  This  would  in  all  likelihood  have  the 
effect  of  reinforcing  the  price  pressure  on  the  Union  industry,  with  an  expected 
negative impact on its situation. 

(211)  During  the  period  considered  the  situation  of  the  Union  industry  improved,  in 
particular  in  terms  of  productivity  and  capacity  utilisation  as  well  as  profit  margins 
that has reached in the RIP a level close to the target profit established in the original 
investigation.  It  can  therefore  be  concluded  that  the  Union  industry,  albeit  still  in  a 
fragile  situation,  did  not  suffer  material  injury  during  the  RIP.  However,  given  the 
likely  substantial  increase  of  subsidised  imports  from  India,  which  are  likely  to 

EN 

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undercut the Union industry’s sales prices, it is concluded that the situation would very 
likely deteriorate and the material injury would recur, should measures be allowed to 
lapse. 

F. UNION INTEREST 

(212)  In  accordance  with  Article  31  of  the  basic  Regulation,  it  was  examined  whether  the 
maintenance of the existing countervailing measures would be against the interest of 
the  Union  as  a  whole.  The  determination  of  the  Union  interest  was  based  on  an 
appreciation of all the various interests involved. All interested parties were given the 
opportunity  to  make  their  views  known  pursuant  to  Article  31(2)  of  the  basic 
Regulation.  

(213)  It  should  be  recalled  that  the  adoption  of  measures  was  considered  not  to  be  against 
the  interest  of  the  Union  neither  in  the  original  investigation  nor  in  the  last  expiry 
review.  Furthermore,  the  analysis  in  the  last  expiry  review  was  carried  out  in  the 
situation where the measures had been already in place and thus the assessment took 
into account any undue negative impact on the parties concerned by the measures in 
question.  

(214)  On this basis, it was examined whether despite the conclusions on the continuation of 
subsidisation  and  likelihood  of  recurrence  of  injury,  any  compelling  reasons  existed 
which  would  lead  to  the  conclusion  that  it  is  not  in  the  Union  interest  to  maintain 
measures in this particular case. 

1. 

Interest of the Union industry 

(215)  The continuation of the countervailing measures on imports from India would help the 
Union  industry  to  continue  the  on-going  restructuring  and  enhance  its  only  recently 
improved  economic  situation,  as  it  would  help  avoiding  that  the  Union  industry  is 
exposed to the substantial volumes of subsidized imports from India, which the Union 
industry could not withstand. The Union industry would therefore continue to benefit 
from the maintenance of the current countervailing measures.  

(216)  Accordingly, it is concluded that the maintenance of countervailing measures against 

India would be in the interest of the Union industry.  

2. 

Interest of unrelated importers in the Union 

(217)  None  of  the  unrelated  importers  cooperated  in  the  present  review.  Despite  the 
measures in force the imports from India continued and nearly doubled over the period 
considered.  

(218)  The imports from other third countries without any measures were also available and 
reached significant market share during the RIP (see recital (149) above). Therefore, 
even with the measures in place, importers had access to alternative sources of supply.  

(219)  Bearing  in  mind  that  there  is  no  evidence  suggesting  that  the  measures  in  force 
considerably affected importers, it is concluded that the continuation of measures will 
not be against the interest of the Union importers. 

3. 

Interest of the suppliers of the raw materials in the Union 

(220)  The raw material for the manufacturing of the product concerned is PTA/MEG. Two 
out of five  known suppliers of  raw  material  (one  supplier  of  PTA  and  one  of  MEG) 
cooperated with the investigation by submitting the questionnaire reply. Both suppliers 
of the raw material expressed their support for the continuation of the measures.  

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(221)  The investigation showed that the cooperating PTA producer represented a substantial 
part of the PTA purchases of the sampled Union producers in the RIP. Given that PTA 
has no other use in the Union than the production of PET, it is reasonable to assume 
that PTA producers are largely dependent on the PET industry.  

(222)  As to the cooperating MEG supplier, MEG represented relatively small part of its total 
turnover  in  the  RIP.  With  regard  to  MEG,  PET  is  not  its  only  or  major  possible 
application  and  MEG  producers  are  less  dependent  on  the  situation  of  the  PET 
industry.  Consequently,  it  is  considered  that  the  continuation  of  measures  against 
subsidised imports of PET from India would have a positive, although likely limited, 
impact on the suppliers of MEG.  

(223)  It was alleged that the suppliers of raw material do not depend on the Union producers 
of PET; in particular, as it was argued that two out of four sampled Union producers 
were in fact importing the raw materials. 

(224)  In  relation  to  this  claim  the  investigation  has  shown  that  the  imported  material  was 
predominantly  MEG  that  can  also  be  used  for  other  than  PET  applications.  No 
indications were gathered showing more than negligible imports of PTA to the Union. 
Therefore, this claim does not affect the conclusions taken as regards the dependency 
of PTA producers on PET production in the Union.  

(225)  Consequently,  it  is  considered  that  the  continuation  of  measures  against  subsidised 
imports of PET from India would benefit the PTA producers and also, although to a 
lesser  extent,  the  MEG  suppliers.  As  a  consequence  the  continuation  of  measures 
against  imports  from  India  would  not  be  against  the  interest  of  the  raw  material 
suppliers. 

(226)  Following  the  disclosure  some  parties  claimed  that  PTA  was  exported  and  therefore 
the PTA producers were claimed not to be dependent on Union industry. No evidence 
supporting  this  claim  was  presented.  Therefore  the  argument  of  the  parties  was 
dismissed as unsubstantiated. 

(227)  Moreover, the same parties claimed that lifting the measures will not have any impact 
on the PTA producers as the cooperating users will allegedly not switch to imports and 
will  continue  to  source  PET  from  the  Union  industry.  Therefore,  the  level  of  PTA 
consumption  in  the  Union  will  remain  the  same.  Based  on  the  findings  of  the 
investigation  the  Union  industry  continued  to  lose  market  share  to  the  benefit  of 
imports  during  the  period  considered.  This  shows  that  the  switch  to  imports  is  not 
hypothetical  (see  recital  (164)  above).  The  argument  of  the  parties  was  therefore 
dismissed. 

4. 

Interest of PET recycling industry 

(228)  The Union industry argued that the situation of the recycling industry depends on the 
sustainable price of virgin PET (non-recycled PET) on the Union market. Their claim 
was  substantiated  by  a  press  release  of  an  association  of  plastic  recyclers  in  Europe, 
according  to  which  a  potential  lifting  of  the  measures  on  virgin  PET  could  further 
worsen the situation of the recycling industry. 

(229)  Some interested parties contested that the situation of the recycling industry depends 
on the sustainable price of virgin PET on the Union market arguing that the prices of 
virgin  PET  and  recycled  PET  were  unrelated.  It  was  claimed  that  recycled  PET  is 
mainly used for the production of polyester fibre and therefore cannot be linked to the 
price developments of virgin PET. In addition, it was noted that the recycled PET is 
entirely  supported  by  bottle-fillers  and  thus  the  industry  does  not  depend  on  PET 

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producers. Finally, it was also noted that recycling industry did not come forward as 
an interested party in the present investigation. 

(230)  Since  the  recycling  industry  did  not  come  forward  in  this  investigation,  none  of  the 
above-mentioned  allegations  could  have  been  verified  against  the  actual  figures. 
Therefore, it is considered that in overall the measures in force would not be against 
the interest of the recycling industry in the Union. 

5. 

Interest of the users 

(231)  The  product  concerned  is  predominantly  used  to  produce  bottles  for  water  and  other 
soft  drinks.  Its  use  for  the  production  of  other  packages  (foodstuff,  sheets,  etc.) 
remains relatively limited. Bottles of PET are produced in two stages: (i) first a pre-
form  is  made  by  mould  injection  of  PET,  and  (ii)  later  the  pre-form  is  heated  and 
blown into a bottle. Bottle making can be an integrated process (i.e. the same company 
buys PET, produces a pre-form and blows it into the bottle) or limited to the second 
stage  (blowing  the  pre-form  into  a  bottle).  Pre-forms  can  be  relatively  easily 
transported as they are small and dense, while empty bottles are unstable and due to 
their size very expensive to transport. 

(232)  On  this  basis,  two  main  groups  of  downstream  users  have  been  established  for 
studying  of  the  impact  of  the  measures  in  force:  (i)  converters  and/or  bottle  makers, 
converting  PET  chips  into  pre-forms  (or  bottles)  and  selling  them  for  downstream 
processing;  and  (ii)  bottlers,  filling  (and  blowing)  the  bottles  out  of  pre-form;  this 
group  represents  mostly  the  producers  of  mineral  water  and  soft  drinks.  The  bottlers 
are often involved in the PET business either via integrated bottle making operations 
or  via  tolling  agreements  with  subcontracted  converters  and/or  bottle  makers  for 
whom  they  negotiate  the  PET  price  with  the  producer  (soft  tolling)  or  even  buy  the 
PET for their own bottles (hard tolling).  

(233)  Seventeen  (five  converters  and  twelve  bottlers)  cooperated  in  the  investigation  and 
provided  information  collected  by  the  questionnaire.  The  cooperating  converters 
represented  22.7%  and  bottlers  13%  of  the  total  consumption  of  PET  in  the  Union. 
The  replies  of  bottlers  came  from  various  branches  of  the  multinational  companies 
(known as brand-owners).  

(234)  It has been established that the cooperating users sourced PET predominantly from the 
Union producers and only a small proportion was sourced from imports. The imports 
from India represented roughly half of these imports and thus a minimal proportion of 
the  sourced  PET.  Nevertheless,  the  imports  from  other  third  countries  without  any 
measures were also available and reached significant market share during the RIP (see 
recital (149) above). Therefore, even with the measures in place, the users had access 
to alternative sources of supply.  

6. 

Arguments of the users' industry 

(235)  Users claimed to be significantly affected by substantial increases in the price of PET 
in  recent  years  which  cannot  be  transferred to  retailers  and  consumers  in  the  current 
economic  environment.  It  is  claimed  that  these  price  increases  have  resulted  from 
accumulation  of  many  years  of  application  of  trade  defence  measures,  which  have 
protected the Union producers from the competition of imports at the time when the 
Union PET industry became more concentrated and integrated. As a result, the users 
claimed that the measures in place, through their alleged impact on the price of PET, 
are responsible for the deterioration of the downstream industry's employment, R&D 
and  competitiveness  on  export  markets,  with  a  more  acute  impact  on  SMEs.  It  was 

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also claimed that the job losses due to the measures in force exceeded the number of 
people currently employed by the Union PET industry. 

6.1. 

Price sensitivity and cost structure of the users 

(236)  As regards the PET price sensitivity of converters, PET was found to represent around 
80% of the total costs. PET is therefore considered a critical cost component for this 
type of activity. In addition, the converters' industry was found to be rather fragmented 
with  a  relatively  weak  negotiating  position  against  large  bottlers  and  inherent 
structural problems typical for the commodity based industry. As a result, this sector 
showed  an  increasing  tendency  to  vertical  integration  with  bottlers  and  the  use  of 
tolling  agreements  on  the  basis  of  which  the  conversion  fees  are  guaranteed  and  the 
PET  price  is  ultimately  negotiated  and  paid  by  the  bottlers.  It  is  estimated  that 
substantial  part  of  PET  purchases  on  the  Union  market  is  controlled  directly  by  the 
large  bottlers.  Since  the  contracts  for  pre-forms  often  include  a  mechanism  for 
reflecting the variation of PET prices, the convertors are increasingly neutral towards 
the developments of PET prices.  

(237)  Following the disclosure some users contested the conclusion on the increased use of 
tolling  and  price  formulas.  The  information  in  the  file  confirmed  existence  of  such 
trend. The claim was therefore dismissed. 

(238)  It was claimed that the measures in place would not cause damage to the converters, if 
similar measures were applied on imports of preforms into the Union. It was argued 
that in the areas close to the Union border with third countries, in which there are no 
measures  against  imports  of  PET  from  India,  there  are  incentives  to  delocalise  the 
production of preforms and import them free of countervailing measures on PET into 
the Union. It is acknowledged that to some extent there is an economic rationale for 
this  process 
the 
delocalisation is likely to occur only within limited distances. In overall, the claimed 
negative  impact  of  the  measures  in  question  on  some  converters  is  therefore 
considered to be marginal. 

to  be  happening.  However,  given 

transportation  cost, 

the 

(239)  As regards the PET price impact on bottlers, based on the reported figures, the PET is 
estimated  to  represent  on  a  weighted  average  basis  9%  of  total  costs  of  bottled  soft 
drinks and 12% of the total costs of bottled mineral water. This shows that PET is not 
the main cost component for the bottling industry.  

(240)  In addition, the investigation has established that PET was the preferred although not 
the  exclusive  packaging  material  of  bottlers.  PET  products  represented  75%  of  the 
turnover  of  water  bottlers  and  50%  of  the  turnover  of  producers  of  soft  drinks. 
Furthermore,  the  investigation  showed  that  contracts  between  many  large  bottlers 
(brand  owners)  and  PET  producers  were  based  on  a  formula  whereby  the  price  was 
adjusted  to  reflect  fluctuation  of  prices  of  raw  materials  for  PET.  This  confirms  the 
existing negotiating power of the large and thus the most representative bottlers over 
the conversion margin of the PET producers.  

(241)  Following the disclosure some users reiterated their argument that PET is a basic cost 
component for converters, soft drink and bottled water industries and the findings in 
this  respect  were  inaccurate  and  not  based  on  the  reported  data.  It  is  noted  that  the 
situation  of  converters  was  analysed  separately  and  this  comment  is  in  their  case 
unfounded (see recital (236) above). As regards the assessment of the situation of the 
bottlers it is confirmed that the cost ratios established in the investigation are based on 
the figures reported by the cooperating bottlers following a methodology available to 

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all  parties.  The  established  cost  ratios  were  in  line  with  the  findings  of  previous 
investigations  concerning  the  same  product  concerned17.  The  claims  of  the  parties 
were therefore considered unsubstantiated. 

(242)  Following the disclosure some users claimed that the essence of the company specific 
data and information provided by them was not reflected in the analysis of the Union 
interest.  It  is  confirmed  that  the  data  was  used  as  reported  by  the  users  in  their 
questionnaire  replies.  The  calculation  methodology  was  made  available  to  all  parties 
concerned. On this ground the claim was rejected. 

(243)  The  investigation  has  also  established  that  based  on  the  expected  and/or  desired 
decrease of PET prices estimated by the verified bottlers themselves, if the measures 
would result in negligible cost reduction for the bottlers. Based on these estimates of 
PET  price  decrease and the  established cost ratios, the respective cost reduction  was 
calculated to be within the range of 0.3-0.7% of the total costs of the bottlers for their 
PET-related activities. 

(244)  Following the disclosure some users disputed this conclusion arguing that any saving 
in  costs  would  be  significant.  Some  users  put  forward  new  estimates  in  their 
submissions without providing any new evidence. It is emphasised that the prospective 
savings are hypothetical, as was also admitted by some users themselves. As regards 
the  converters,  no  quantification  of  prospective  saving  was  put  forward  for  this 
segment. As regards the bottlers, it was considered that should the alleged PET price 
decrease  materialise,  in  the  light  of  the  costs  structure  of  the  bottlers,  saving  within 
0.3%-0.7%  of  total  costs  cannot  be  considered  'significant'.  Since  no  new  evidence 
was provided, the claim was dismissed as unsubstantiated. 

(245)  It  was  claimed  that  some  bottled-water  producers  have  inherent  vulnerabilities 
stemming  from  legal  requirements  imposed  for  the  source  water  to  be  bottled  at  the 
source and limited extraction volumes. The sector is being dominated by SMEs, which 
has  an  impact  on  the  cost  structure  of  the  companies  in  questions.  Also,  variations 
have  been  observed  in  the  price  levels  of  final  products  across  Member  States 
depending  on  the  purchasing  power  of  the  local  population.  On  these  grounds  it  is 
considered that the impact of an eventual decrease of PET prices, if the measures were 
lifted, would be more pronounced for this part of the bottling industry. 

6.2. 

Alleged premium prices and profits of Union industry 

(246)  Some parties alleged the existence of premium prices and premium margins practised 
by PET producers in the Union, claiming that these would be at the origin of the price 
increases  in  2011.  This  claim  was  also  supported  by  the  comparison  made  between 
PET prices and spread over the raw materials in the Union to the situation on Asian 
market  and  in  the  USA.  It  was  claimed  that  this  situation  results  from  the 
accumulation of trade remedies.  

(247)  It is to be noted that the increase of the prices of PET in 2011, as well as its decline in 
2009,  was  a  worldwide  phenomenon  driven  by  the  evolution  of  the  cost  of  raw 
materials  (see  recital  (155)).  Data  submitted  by  the  parties  systematically  showed  a 
very  close  correlation  between  the  evolution  of  PET  prices  in  Europe,  Asia  and  the 
USA. Nevertheless, there are indeed differences in the prices of PET across the world 
which  are  related  to  various  reasons,  in  particular,  the  specific  cost  structure  in  each 
region,. As regards the argument on existing premium margin in the Union, it is noted 
that  even  under  exceptional  circumstances  in  late  2010  and  beginning  of  2011  the 

17 

E.g. Commission Regulation No 473/2010; Council Regulation No 192/2007. 

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Union industry has merely reached the profitability considered reasonable for this type 
of  industry.  No  evidence  of  premium  profit  was  found.  Therefore,  the  argument  on 
existing 'premium' prices and 'premium' margins on the PET in the Union that are due 
to the existence of the measures in question has to be rejected.  

(248)  Following  the disclosure some parties reiterated their argument that the prices in the 
Union were unjustifiably high reflecting the impact of accumulation of anti-dumping 
measures  operating  in  a  market  with  concentration  among  Union  producers,  vertical 
integration  and  limited  production  unable  to  satisfy  the  consumption.  It  was  also 
claimed  that  the  price  data  also  showed  that  the  higher  prices  in  the  Union  are  not 
reflecting  the  higher  costs  of  raw  materials.  It  is  noted  that  the  arguments  on 
concentration,  vertical  integration  and  production  capacity  of  Union  industry  were 
addressed  in  recitals  (207)  and  (259)  respectively.  As  regards  the  claimed  impact  of 
these  factors  on  the  PET  price  in  the  Union  it  is  recalled  that  the  PET  price 
development is driven by the price of raw materials that account for up to 90% of cost 
of PET (see recital (173) above). Also, the increase in PET prices in 2010/2011 was a 
worldwide  phenomenon  (see  recital  (172)  above).  The  claims  of  the  parties  were 
therefore unsubstantiated. 

(249)  As regards the argument concerning the gap between the Union PET price and prices 
in Asia and US, and in addition to findings already stated in recital (244) above, it was 
found  that  the  difference  in  prices  between  US  and  Union  market  was  volatile,  yet 
moderate.  Union  prices  were  not  systematically  higher  as  claimed.  Union  and  Asian 
market were found to be very different in terms of cost structures linked in particular 
to  the  size  of  the  market  and  economies  of  scale,  access  to  the  raw  materials  and 
capacity. Therefore, comparing the average prices between these two markets was not 
meaningful. The argument of the parties was therefore found unsubstantiated. 

(250)  Also, some parties claimed that the prices in the Union reflect a higher spread over the 
cost of raw materials as compared to US or Asia. The comparison of spreads follows 
the same logic as comparison on prices on various regional markets with the difference 
that  the  variations  of  prices  of  raw  materials  between  various  regional  markets  are 
accounted  for.  Nevertheless,  the  existing  structural  differences  between  the  markets 
can justify the difference in conversion fees. The extraordinary profits made by Union 
industry at the break of 2010/2011 were explained in recital (179) above. In none of 
the situations the measures were found to play a role. Therefore the argument of the 
parties was rejected. 

(251)  The  same  parties  also  claimed  that  the  largest  producer  in  the  Union  charged  higher 
prices in the Union than on other markets and recorder higher revenues in 2010 in the 
Union  than  elsewhere.  In  this  context,  it  is  considered  that  it  is  economically 
justifiable that a transnational company would have different cost structures and thus 
different  prices  on  different  regional  markets.  The  exceptional  profitability  levels  at 
the  break  of  2010/2011  were  explained  in  recital  (179)  above.  On  these  grounds  the 
argument was rejected. 

6.3. 

Economic situation of users and claimed impact of the measures 

(252)  Further  claims  were  made  as  regards  the  worsening  economic  situation  of  the  user's 
industry, such as closing facilities and reducing employment. It was alleged that this 
was  the  result  of  the  PET  price  increase.  In  addition,  it  was  claimed  that  the 
competitiveness of European leading brands has been eroded as their exports in third 
countries  were  in  direct  competition  with  bottled-products  that  benefit  from  PET  at 
international prices.  

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(253)  It should be noted, that based on the information submitted by the cooperating users, 
the users segment was not found to be loss-making even though there was a decline in 
the  overall  profitability  level  in  RIP.  The  profit  margin  of  the  users'  industry 
established  on  the  basis  of  the  questionnaire  replies  according  to  the  methodology 
made  available  to  all  parties  was  found  to  be  at  similar  level  as  the  profitability 
established  for  the  Union  industry  in  RIP.  The  two  verified  companies  (bottlers) 
reported further expansions in production volumes and increased profitability over the 
period  considered.  Some  converters  were  found  operating  on  tight  margins,  in  some 
cases facing structural and financial difficulties. However, no direct the link with the 
measures  in  place  could  have  been  established  in  this  respect.  Similarly,  certain 
decline in the economic situation of the bottlers was linked to the squeeze caused in 
2011  by  the  sudden  increase  of  PET  price  that  could  have  not  been  passed  on  to 
retailers under the current economic downturn. However, while it has been established 
that the situation of the users industry deteriorated to certain extent in 2011, the link 
between  the  decline  and  the  existence  of  the  measures  was  not  demonstrated, 
especially given that the measures were in places since 2000.  

(254)  Following  the  disclosure  some  parties  disagreed  with  the  conclusion  that  the  users' 
industry was not loss making. The parties also claimed that the profit margins of users 
were lower than those of the Union industry. As regards the assessment of profitability 
of  the  users'  industry,  the  information  collected  from  the  cooperating  users 
contradicted this claim. The methodology was made available to the parties. Although 
some cooperating users could have been loss making, the user's industry was overall 
found to be profitable. In any event, if the increase of PET prices was found to be one 
element affecting the profitability of the users, no link between the measures and the 
profitability  of  the  companies  in  question  was  demonstrated.  As  regards  the 
comparison  of  profit  margins  of  users  and  the  Union  industry,  this  claim  was  not 
substantiated.  Due  to  the  volatility  of  the  profitability  of  the  Union  industry  (see 
recitals  (176)  to  (179)  above)  the  comparison  between  the  two  segments  was  not 
considered  conclusive.  In  any  event,  the  both  segments  showed  similar  profitability 
levels during the RIP (see recital (253). In this light, the comments of the parties were 
rejected as unsubstantiated.  

(255)  As  regards  the  alleged  erosion  of  the  competitiveness  of  the  exports  of  the  Union 
producers  of  bottled  mineral  water/soft  drinks,  this  claim  was  neither  substantiated, 
nor  has  a  link  to  the  existence  of  the  measures  in  place  been  in  this  context 
demonstrated. 

(256)  Following  the  disclosure  the  parties  reiterated  that  the  rising  PET  prices  have  a 
negative  impact  on  the  competitiveness  of  exports  of  bottled  water.  It  is  recognised 
that  the  PET  price  increase,  among  other  things,  can  have  a  negative  impact  on  the 
competitiveness  of  exports  of  bottled  water.  Nevertheless,  since  no  link  between  the 
PET  price  increase  and  the  measures  in  question  was  found  as  the  PET  prices 
primarily derive from the prices of raw materials, the claimed impact of the measures 
on the eroded competitiveness was rejected.  

(257)  Finally, as to the claimed effect of the measures on the employment, the investigation 
revealed that the verified job losses of the users industry were predominantly linked to 
the  productivity  and  efficiency  gains  and  a  part  concerned  the  reduction  of  the 
temporary staff.  

(258)  Following the disclosure some parties disputed this finding on the grounds that it did 
not  reflect  the  situation  of  the  entire  sector.  In  addition  to  the  findings  described  in 

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recital (254) above, it is noted that total jobs reported by the converters significantly 
increased and none of them reported job losses. Bottlers claimed job losses as a result 
of  increased  PET  price.  However,  the  increase  in  PET  price  being  a  worldwide 
phenomenon,  no  link  between  job  losses  and  the  measures  was  established. 
Furthermore, 90% of the job losses reported by the users’ questionnaires replies were 
concentrated on three companies. One of them, a verified user representing substantial 
part  of  the  reported  job  losses,  increased  substantially  its  volumes  over  the  period 
considered  and  such  losses  are  therefore  associated  to  productivity  gains.  As  for  the 
remaining  two  companies,  they  were  found  to  have  the  profitability  margins  among 
the highest of the cooperating parties in their segment and above the target profit of the 
Union industry in this case. The claims were therefore dismissed. 

6.4. 

Other arguments 

(259)  Following  the  disclosure  some  parties  argued  that  the  Union  producers  do  not  have 
sufficient  capacities  to  meet  the  existing  demand.  It  is  noted  that  the  Union  industry 
operated at 86% of its production capacity in RIP and has sufficient spare capacity to 
cover  total  domestic  consumption  of  PET.  In  addition,  imports  from  other  countries 
with  and  without  measures  continue  to  exist  and  have  an  increasing  tendency.  Also, 
the current measures expired in case of South Korea and are lifted for imports of the 
product concerned from Malaysia and Indonesia. In addition, PET recycling industry 
may constitute further source of PET to cover the PET demand in the Union. For these 
reasons, the alleged problems faced by users due to the claimed insufficient production 
in the Union were not considered substantiated.  

(260)  Following the disclosure some users claimed the analysis did not address the claimed 
adverse  impact of the accumulation of  measures  on the product concerned under  the 
present  review.  In  response  to  this  argument  it  is  noted  that  the  countervailing 
measures  merely  remedy  the  injurious  effect  of  established  subsidisation.  The 
existence of the claimed 'accumulated' effect was not demonstrated. On the contrary, 
despite the measures in place, the imports from countries with measures continue and 
their  volumes  even  increased  during  the  period  considered.  Also,  imports  from 
countries without any measures are available with a growing trend and at substantial 
volumes. The argument of the parties was therefore dismissed. 

7. 

Conclusion on the Union interest 

(261)  To  conclude,  it  is  expected  that  the  extension  of  the  countervailing  measures  on 
imports  from  India  would  provide  an  opportunity  for  the  Union  industry  to  improve 
and  to  stabilise  its  economic  situation  following  the  investments  and  consolidation 
made in the recent years.  

(262)  It is also considered that an improved economic situation of the Union industry may be 
in the interest of PTA producers and, to a lesser extent, MEG producers in the Union.  

(263)  The  economic  situation  of  some  users  has  worsened  since  the  last  review  and  in 
particular  smaller  bottle-water  producers  were  found,  among  other  reasons,  to  be 
negatively  affected,  especially  it  seems,  by  the  recent  PET  price  increase  since  they 
were unable to pass it on to retailers under the current economic climate. However, the 
exceptional price and margin developments of Union industry in 2011 were found to 
be  a  global  phenomenon  primarily  driven  by  the  increase  in  the  prices  of  raw 
materials.  Therefore,  the  allegations  on  existing  'premium'  prices  and  'premium' 
margins linked to existence of the measures in question were found unjustified. At the 

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same  time,  Union  market  continues  to  be  an  open  market  with  existing  alternative 
sources of supply from other third countries without any measures.  

(264)  Against  this  background,  no  link  between  the  PET  price  increase  and  the  existing 
measures was demonstrated. Economic situation of converters was found to be stable 
despite the measures in force. The weight of PET in the total cost of the bottlers was 
found  to  be  limited.  Furthermore,  no  link  between  the  PET  price  variations  and  the 
measures  was  demonstrated.  On  these  grounds,  the  measures  were  found  not  have 
disproportionate effect on the users.  

(265)  Taking  into  account  all  of  the  factors  outlined  above,  it cannot  be  clearly  concluded 
that it is not in the Union interest to maintain the current countervailing measures. 

G. RELATION BETWEEN ANTI_DUMPING AND COUNTERVAILING 
MEASURES 

(266)  A parallel investigation on the expiry of anti-dumping measures has been carried out 
(see  recital  (8)  above).  That  investigation  confirmed  the  necessity  to  continue  the 
application  of  such  measures  at  unchanged  levels.  The  present  investigation  also 
concluded that countervailing measures on exports from India should be kept in force 
at  unchanged  levels.  In  that  respect,  reference  is  made  to  recital  (125)  of  Regulation 
(EC)  No  2604/2000.  As  the  measures  currently  proposed  for  exports  of  PET  from 
India remain unchanged, it follows that Article 14(1) of the Council Regulation (EC) 
No 1225/2009 and Article 24(1) of the Regulation are complied with. 

H. COUNTERVAILING MEASURES 

(267)  All  parties  were  informed  of  the  essential  facts  and  considerations  on  the  basis  of 
which it was intended to recommend that the existing measures be maintained. They 
were also granted a period within which they could make representations subsequent 
to this disclosure. The submissions and comments were duly taken into consideration, 
where warranted.  

(268)  On the basis of the above analyses the countervailing measures applicable to imports 
of PET originating in India should be maintained in compliance with Article 18(1) of 
the basic Regulation. It is recalled that these measures consist of specific duties.  

(269)  The  individual  company  countervailing  duty  rates  specified  in  this  Regulation  are 
solely  applicable  to  imports  of  the  product  concerned  produced  by  these  companies 
and  thus  by  the  specific  legal  entities  mentioned.  Imports  of  the  product  concerned 
manufactured by any other company not specifically mentioned in Article 1(2) of this 
Regulation  with  its  name  and  address,  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’. 

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

(271)  In  order  to  ensure  proper  enforcement  of  the  countervailing  duty,  the  residual  duty 
level  should  not  only  apply  to  non-cooperating  exporters  but  also  apply  to  those 

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companies  which  did  not  have  any  exports  during  the  RIP.  However,  the  latter 
companies  are  invited  ,  when  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 

A  definitive  countervailing  duty  is  hereby  imposed  on  imports  of  polyethylene 
1. 
terephthalate  having  a  viscosity  number  of  78  ml/g  or  higher,  according  to  ISO  Standard 
1628-5, currently falling within CN code 3907 60 20 and originating in India. 

The  rate  of  the  definitive  countervailing  duty  applicable  to  the  product  described  in 

2. 
paragraph 1 and manufactured by the companies listed below shall be as follows: 

Country 

Company 

India 

India 

India 

India 

India 

India 

Reliance Industries Ltd  

Pearl Engineering Polymers Ltd 

Senpet Ltd 

Futura Polyesters Ltd 

Dhunseri Petrochem & Tea Limited 

All other companies 

Counter-
vailing duty 
(EUR/tonne) 

TARIC 
additional code 

90.4 

74.6 

22.0 

0 

106.5 

69.4 

A181 

A182 

A183 

A184 

A585 

A999 

3. 
In  cases  where  goods  have  been  damaged  before  entry  into  free  circulation  and, 
therefore,  the  price  actually  paid  or  payable  is  apportioned  for  the  determination  of  the 
customs  value  pursuant  to  Article  145  of  Commission  Regulation  (EEC)  No  2454/9318,  the 
amount  of  countervailing  duty,  calculated  on  the  basis  of  the  amounts  set  above,  shall  be 
reduced by a percentage which corresponds to the apportioning of the price actually paid or 
payable. 

Notwithstanding paragraphs 1 and 2, the definitive countervailing duty shall not apply 

4. 
to imports released for free circulation in accordance with Article 2. 

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

5. 
apply. 

Article 2  

1. 
Imports shall be exempt from the countervailing duties imposed by Article 1 provided 
that they are produced and directly exported (i.e. invoiced and shipped) to a company acting 
as  an  importer  in  the  Union  by  the  companies  whose  names  are  listed  in  Decision 
2000/745/EC,  as  from  time  to  time  amended,  declared  under  the  appropriate  TARIC 
additional code and that the conditions set out in paragraph 2 are met. 

18 

OJ L 253, 11.10.1993, p. 1.  

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2. 
When  the  request  for  release  for  free  circulation  is  presented,  exemption  from  the 
duties shall be conditional upon presentation to the customs authorities of the Member State 
concerned  of  a  valid  Undertaking  Invoice  issued  by  the  exporting  companies  from  which 
undertakings are accepted, containing the essential elements listed in the Annex. Exemption 
from  the  duty  shall  further  be  conditional  on  the  goods  declared  and  presented  to  customs 
corresponding precisely to the description on the Undertaking Invoice. 

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

Article 3 

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

Done at Brussels,  

For the Council 
The President 

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ANNEX  

Elements to be indicated in the Undertaking Invoice referred to in Article 2(2): 

1. The Undertaking Invoice number. 

2. The TARIC additional code under which the goods on the invoice may be customs-cleared 
at Union borders. 

3. The exact description of the goods, including: 

— the product reporting code number (PRC) (as established in the undertaking offered by the 
producing exporter in question), 

— CN code, 

— quantity (to be given in units). 

4. The description of the terms of the sale, including: 

— price per unit, 

— the applicable payment terms, 

— the applicable delivery terms, 

— total discounts and rebates. 

5. Name of the company acting as an importer to which the invoice is issued directly by the 
company. 

6.  The  name  of  the  official  of  the  company  that  has  issued  the  undertaking  invoice  and  the 
following signed declaration: 

‘I, the undersigned, certify that the sale for direct export to the European Union of the goods 
covered by this invoice is being made within the scope and under the terms of the undertaking 
offered  by  …  (name  of  company),  and  accepted  by  the  European  Commission  through 
Decision 2000/745/EC. I declare that the information provided in this invoice is complete and 
correct.’  

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