CELEX: 52012PC0237
Language: en
Date: 2012-05-25
Title: Proposal for a COUNCIL REGULATION terminating the partial interim review concerning the countervailing measures on imports of certain polyethylene terephthalate (PET) originating in, inter alia, India

|
			
		
		
		52012PC0237
		
			Proposal for a COUNCIL REGULATION terminating the partial interim review concerning the countervailing measures on imports of certain polyethylene terephthalate (PET) originating in, inter alia, India /* COM/2012/0237 final - 2012/0121 (NLE) */
			
				
		
		
			
			   	EXPLANATORY MEMORANDUM
1.           Context of the proposal
·      Grounds for and objectives of the proposal
This proposal concerns the application of
Council Regulation (EC) No 597/2009 of 11 June 2009 on protection against subsidised
imports from countries not members of the European Community ('the basic
Regulation') in the proceeding concerning imports of certain polyethylene
terephthalate (PET) originating, inter alia, in India.
·      General context
This proposal is made in the context of the
implementation of the basic Regulation and is the result of an investigation
which was carried out in line with the substantive and procedural requirements
laid out in the basic Regulation.
·      Existing provisions in the area of the proposal
Definitive measures are in force and were imposed
by Council Regulation (EC) No 1645/2005 of 6 October
2005 amending Regulation (EC) No 2603/2000 imposing a definitive countervailing
duty on imports of certain polyethylene terephthalate
(PET) originating, inter alia, in India.
·      Consistency with other policies and objectives of the Union
Not applicable.
2.           Consultation of
interested parties and impact assessment
·      Consultation of interested parties
Interested parties concerned by the proceeding
have had the possibility to defend their interests during the investigation, in
line with the provisions of the basic Regulation.
·      Collection and use of expertise
There was no need for external expertise.
·      Impact assessment
This proposal is the result of the
implementation of the basic Regulation.
The basic Regulation does not contain
provisions for a general impact assessment but contains an exhaustive list of
conditions that have to be assessed.
3.           LEGAL ELEMENTS OF THE
PROPOSAL
·      Summary of the proposed action
On 2 April 2011 the Commission initiated a
partial interim review concerning imports of certain polyethylene terephthalate
(PET) originating, inter alia, in India.
The attached proposal for a Council Regulation
is based on the findings of the investigation carried out which is limited in
scope to the examination of subsidisation and as far as the applicant is
concerned. 
The investigation found that the level of subsidisation
was lower than in the last investigation, but that the changed circumstances
leading to the reduced subsidy margin are not of a lasting nature
It is therefore proposed that the Council adopt
the attached proposal for a termination Regulation which should be published no
later than 1 July 2012.
·      Legal basis
Council Regulation (EC) No 597/2009 of 11 June
2009 on protection against subsidised imports from countries not members of the
European Community.
·      Subsidiarity principle
The proposal falls under the exclusive
competence of the European Union. The subsidiarity principle therefore does not
apply.
·      Proportionality principle
The proposal complies with the proportionality
principle for the following reasons:
The form of action is described in the
above-mentioned basic Regulation and leaves no scope for national decision.
Indication of how financial and administrative
burden falling upon the Union, national governments, regional and local
authorities, economic operators and citizens is minimized and proportionate to
the objective of the proposal is not applicable.
·      Choice of instruments
Proposed instrument: regulation.
Other means would not be adequate because the
basic Regulation does not provide for alternative options.
4.           BUDGETARY IMPLICATION
The proposal has no implication for the Union
budget.
2012/0121 (NLE)
Proposal for a
COUNCIL REGULATION
terminating the partial interim review
concerning the countervailing measures on imports of certain polyethylene
terephthalate (PET) originating in, inter alia, India
THE COUNCIL OF THE EUROPEAN UNION,
Having regard to the Treaty on the
Functioning of the European Union,
Having regard to Council Regulation (EC) No
597/2009 of 11 June 2009 on protection against subsidised imports from
countries not members of the European Community[1]
('the basic Regulation'), and in particular Articles 19 and 24 thereof,
Having regard to the proposal submitted by
the European Commission after consulting the Advisory Committee,
Whereas:
1.           PROCEDURE
1.1.        Previous investigation and
existing countervailing measures
(1)       By Regulation (EC) No
2603/2000[2],
the Council imposed a definitive countervailing duty on imports of polyethylene
terephthalate (PET) originating, inter alia, in India ('the original
anti-subsidy investigation'). The definitive findings and conclusions of an
accelerated review pursuant to Article 20 of the basic Regulation are set out
in Council Regulation (EC) No 1645/2005[3].
Following an expiry review, the Council, by Regulation (EC) No 193/2007[4], imposed a definitive
countervailing duty for a further period of 5 years. The countervailing
measures were amended by Council Regulation (EC) No 1286/2008[5] following a partial interim
review ('the last review investigation'). The countervailing measures consist
of a specific duty. The rate of the duty ranges between EUR 0 and EUR 106,5 per
tonne for individually named Indian producers with a residual duty rate of EUR
69,4 per tonne imposed on imports from all other producers.
(2)       Following a name change of
one Indian company, South Asian Petrochem Ltd, by Notice (EC) No 2010/C 335/07[6], the Commission concluded that
the anti-subsidy findings in respect of South Asian Petrochem Ltd should apply
to Dhunseri Petrochem & Tea Limited.
1.2.        Existing anti-dumping
measures
(3)       By Regulation (EC) No
2604/2000[7],
the Council imposed a definitive anti-dumping duty on imports of PET
originating, inter alia, in India ('the original anti-dumping
investigation'). A review pursuant to Article 11(4) (‘the new exporter review‘)
of Council Regulation (EC) No 1225/2009[8]
('the basic anti-dumping Regulation') concerning South Asian Petrochem Ltd was
subsequently conducted and its definitive findings and conclusions are set out
in Council Regulation (EC) No 1646/2005[9].
Following an expiry review, the Council, by Regulation (EC) No 192/2007[10], imposed a definitive
anti-dumping duty for a further period of five years. The anti-dumping measures
were amended by Council Regulation (EC) No 1286/2008 following a partial
interim review investigation (‘the last anti-dumping review investigation’).
The measures were set at the level of the injury elimination and consisted of
specific anti-dumping duties. The rate of the duty ranges between EUR 87,5 and
EUR 200,9 per tonne for individually named Indian producers with a residual
duty rate of EUR 153,6 per tonne imposed on imports from all other producers
(‘the current anit-dumping duties’).
(4)       Following a name change of
one Indian company, South Asian Petrochem Ltd, by Notice (EC) No 2010/C 335/06[11], the Commission concluded that
the anti-dumping findings in respect of South Asian Petrochem Ltd should apply
to Dhunseri Petrochem & Tea Limited.
(5)       By Decision 2005/697/EC[12] the Commission accepted
undertakings offered by South Asian Petrochem Ltd setting a minimum import
price ('MIP') (‘the undertaking’). Following a name change, the Commission
concluded by Notice (EC) No 2010/C 335/05 that the undertaking offered by South
Asian Petrochem Ltd should apply to Dhunseri Petrochem & Tea Limited.
1.3.        Initiation of a partial
interim review
(6)       A request for a partial
interim review pursuant to Article 19 of the basic Regulation was lodged by
Dhunseri Petrochem & Tea Limited, an Indian exporting producer of PET ('the
applicant'). The request was limited in scope to subsidisation and to the
applicant. The applicant at the same time also requested the review of the
current anti-dumping measures. The residual anti-dumping and countervailing
duties are applicable to imports of products produced by the applicant and
sales of the applicant to the Union are covered by the undertaking.
(7)       The
applicant provided prima facie evidence that the continued application
of the measure at its current level was no longer necessary to offset the
countervailable subsidisation. In particular, the applicant provided prima
facie evidence showing that its subsidy amount has decreased well below the
duty rate currently applicable to it. This reduction in the overall subsidy
level would mainly be due to the termination of its Export Oriented Unit
('EOU') status. With a magnitude of 13,5%, the EOU scheme accounted for the
vast majority of the 13,9% subsidies established during the accelerated review.
(8)       Having determined, after
consulting the Advisory Committee, that the request contained sufficient prima
facie evidence, the Commission announced on 2 April 2011 the initiation of
a partial interim review ('the present review') pursuant to Article 19 of the
basic Regulation by a notice of initiation published in the Official Journal
of the European Union[13].
The review was limited in scope to the examination of subsidisation in respect
of the applicant.
1.4.        Parties concerned by the
investigation
(9)       The Commission officially
informed the applicant, the representatives of the exporting country and the
association of Union producers about the initiation of the review. Interested
parties were given the opportunity to make their views known in writing and to
request a hearing within the time limit set in the notice of initiation.
(10)     One interested party
requested and was granted a hearing. 
(11)     In order to obtain the
information deemed necessary for its investigation, the Commission sent a
questionnaire to the applicant and the government of India ('GOI') and received
replies within the deadline set for that purpose.
(12)     The Commission sought and
verified all information deemed necessary for the determination of
subsidisation. The Commission carried out verification visits at the premises
of the applicant in Kolkata, India and at the premises of the GOI in New Delhi
(Directorate General of Foreign Trade and Ministry of Commerce) and Kolkata
(Commerce & Industries Department, Government of West Bengal).
1.5.        Review investigation period
(13)     The investigation of
subsidisation covered the period from 1 April 2010 to 31 March 2011 (‘the
review investigation period’ or ‘RIP’).
1.6.        Parallel anti-dumping
investigation
(14)     On 2 April 2011[14] the Commission announced the
initiation of a partial interim review of the current anti-dumping measures
pursuant to Article 11(3) of the basic anti-dumping Regulation, limited in
scope to the examination of dumping in respect of the applicant.
(15)     In the parallel
anti-dumping investigation it was found that the circumstances with regard to
dumping have changed significantly and lastingly, therefore the current
anti-dumping measures applicable to the applicant have been changed.
2.           PRODUCT CONCERNED AND LIKE
PRODUCT
2.1.        Product concerned
(16)     The product under review is
PET having a viscosity of 78 ml/g or higher, according to the ISO Standard
1628- 5, currently falling within CN code 3907 60 20 and originating in India
('the product concerned').
2.2.        Like product
(17)     The investigation revealed
that the product concerned produced in India and sold to the Union is identical
in terms of physical and chemical characteristics and uses to the product
produced and sold on the domestic market in India. It is therefore concluded
that products sold on the domestic and export markets are like products within the
meaning of Article 2(c) of the basic Regulation. 
3.           RESULTS OF THE
INVESTIGATION
3.1.        Subsidisation
(18)     On the basis of the
information submitted by the GOI and the applicant and the replies to the
Commission’s questionnaire, the following schemes, which allegedly involve the
granting of subsidies, were investigated:
Nationwide schemes: 
(a)     Duty Entitlement Passbook Scheme
('DEPBS');
(b)     Export Oriented Units ('EOU') / Export
Processing Zones ('EPZ') / Special Economic Zones ('SEZ');
(c)     Export Promotion Capital Goods Scheme
('EPCGS');
(d)     Focus Market Scheme ('FMS');
(e)     Export Credit Scheme ('ECS');
(f)      Income Tax Exemption Scheme ('ITES').
Regional schemes:
(g)     West Bengal Incentive Scheme.
(19)     The schemes (a) to (d)
specified above are based on the Foreign Trade (Development and Regulation) Act
1992 (No 22 of 1992) which entered into force on 7 August 1992 ('Foreign Trade
Act'). The Foreign Trade Act authorises the GOI to issue notifications
regarding the export and import policy. These are summarised in Foreign Trade
Policy ('FTP') documents, which are issued by the Ministry of Commerce every
five years and updated regularly. Two FTP documents are relevant to the RIP of
this case, i.e. FTP 04-09 and FTP 09-14. The latter entered into force in August
2009. In addition, the GOI also sets out the procedures governing FTP 04-09 and
FTP 09-14 in a 'Handbook of Procedures, Volume I' ('HOP I 04-09' and 'HOP I
09-14' respectively). The Handbook of Procedures is also updated on a regular
basis.
(20)     Scheme (e) is based on
sections 21 and 35A of the Banking Regulation Act 1949, which allows the
Reserve Bank of India ('RBI') to direct commercial banks in the field of export
credits.
(21)     Scheme (f) is based on the
Income Tax Act of 1961, which is amended by the yearly Finance Act.
(22)     Scheme (g) is administered
by the Government of West Bengal and set out in Government of West Bengal
Commerce & Industries Department notification No 580-CI/H of 22 June 1999
(WBIS 1999), replaced by notification No 134-CI/O/Incentive/17/03/I of 24 March
2004 (WBIS 2004).
3.2.        Duty Entitlement Passbook
Scheme (‘DEPBS’)
(a)     Legal Basis
(23)     The detailed description of
the DEPBS is contained in paragraphs 4.3 of FTP 04-09 and FTP 09-14 as well as
in chapter 4 of HOP I 04-09 and HOP I 09-14. 
(b)     Eligibility
(24)     Any manufacturer-exporter
or merchant-exporter is eligible for this scheme. 
(c)     Practical implementation of the
DEPBS
(25)     An eligible exporter can
apply for DEPBS credits which are calculated as a percentage of the value of
products exported under this scheme. Such DEPBS rates have been established by
the Indian authorities for most products, including the product concerned. They
are determined regardless of whether import duties have actually been paid or
not. The DEPB rate for the product concerned during the RIP of the current
investigation was 8% of FOB value, subject to a value cap of INR 58/kg. As a
result, the maximum benefit is INR 4,64/kg.
(26)     To be eligible for benefits
under this scheme, a company must export. At the point in time of the export
transaction, a declaration must be made by the exporter to the authorities in
India indicating that the export is taking place under the DEPBS. In order for
the goods to be exported, the Indian customs authorities issue, during the
dispatch procedure, an export shipping bill. This document shows, inter alia,
the amount of DEPBS credit which is to be granted for that export transaction.
At this point in time, the exporter knows the benefit it will receive. Once the
customs authorities issue an export shipping bill, the GOI has no discretion
over the granting of a DEPBS credit. The relevant DEPBS rate to calculate the
benefit is that which applied at the time the export declaration was made.
Therefore, there is no possibility for a retroactive amendment to the level of
the benefit.
(27)     It was found that in
accordance with Indian accounting standards, DEPBS credits can be booked on an
accrual basis as income in the commercial accounts, upon fulfilment of the
export obligation. Such credits can be used for payment of customs duties on
subsequent imports of any goods unrestrictedly importable, except capital
goods. Goods imported against such credits can be sold on the domestic market
(subject to sales tax) or used otherwise. DEPBS credits are freely transferable
and valid for a period of 24 months from the date of issue.
(28)     Applications for DEPBS
credits are electronically filed and can cover an unlimited amount of export transactions.
De facto, no strict deadlines to apply for DEPBS credits exist. The
electronic system used to manage DEPBS does not automatically exclude export
transactions exceeding the deadline submission periods mentioned in paragraph
4.47 of HOP I 04-09 and HOP I 09-14. Furthermore, as clearly provided in
paragraph 9.3 of the HOP I 04-09 and HOP I 09-14, applications received after
the expiry of submission deadlines can always be considered with the imposition
of a minor penalty fee (i.e. 10% of the entitlement).
(29)     It was found that the
applicant used this scheme during the RIP.
(d)     Conclusions on DEPBS
(30)     The DEPBS provides
subsidies within the meaning of Article 3(1)(a)(ii) and Article 3(2) of the
basic Regulation. A DEPBS credit is a financial contribution by the GOI, since
the credit will eventually be used to offset import duties, thus decreasing the
GOI’s duty revenue which would be otherwise due. In addition, the DEPBS credit
confers a benefit upon the exporter, because it improves its liquidity.
(31)     Furthermore, the DEPBS is
contingent in law upon export performance, and is therefore deemed to be
specific and countervailable under Article 4(4), first subparagraph, point (a)
of the basic Regulation. 
(32)     This scheme cannot be
considered as permissible duty drawback system or substitution drawback system
within the meaning of Article 3(1)(a)(ii) of the basic Regulation as claimed by
the applicant. It does not conform to the strict rules laid down in Annex I
item (i), Annex II (definition and rules for drawback) and Annex III
(definition and rules for substitution drawback) of the basic Regulation. An
exporter is under no obligation to actually consume the goods imported free of
duty in the production process and the amount of credit is not calculated in
relation to actual inputs used. Moreover, there is no system or procedure in
place to confirm which inputs are consumed in the production process of the
exported product or whether an excess payment of import duties occurred within
the meaning of item (i) of Annex I and Annexes II and III of the basic
Regulation. Lastly, an exporter is eligible for the DEPBS benefits regardless
of whether it imports any inputs at all. In order to obtain the benefit, it is
sufficient for an exporter to simply export goods without demonstrating that
any input material was imported. Thus, even exporters which procure all of
their inputs locally and do not import any goods which can be used as inputs
are still entitled to benefit from the DEPBS. 
(e)     Abolishment of the DEPB scheme
(33)     With Public Notice No. 54
(RE-2010) /2009-2014 of 17 June 2011, the DEPB scheme got a final extension of
3 months until 30 September 2011. As no further extension was published
subsequently, the DEPB scheme has effectively been withdrawn from
30 September 2011 onwards. Consequently, this scheme will not confer any
benefits on the applicant after 30 September 2011. It has therefore be verfied
whether, in accordance with Article 15(1) of the basic Regulation, measures
should be imposed on this scheme.
(34)     In this respect, it was
established that the applicant received similar benefits pursuant to the
parallel "duty drawback" scheme. The duty drawback rate for PET was
5,5% of FOB value, subject to a maximum amount of INR 5,50/kg. However, since
the "duty drawback" scheme was not used during the RIP, it is not
possible to calculate a subsidy amount for this scheme.
(35)     The applicant claimed that
the Duty Drawback scheme conforms with the "guidelines on consumption
of inputs in the production process" in Annex II of the basic
Regulation, specifically paragraph I of said Annex. However, similar to the
DEPB scheme, it was established that the duty drawback rate is determined
regardless of whether import duties have actually been paid or not.
(f)      Calculation of the subsidy amount
(36)     In accordance with Articles
3(2) and 5 of the basic Regulation, the amount of countervailable subsidies was
calculated in terms of the benefit conferred on the recipient, which is found
to exist during the review investigation period. In this regard, it was
considered that the benefit is conferred on the recipient at the point in time
when an export transaction is made under this scheme. At this moment, the GOI
is liable to forego the customs duties, which constitutes a financial
contribution within the meaning of Article 3(1)(a)(ii) of the basic Regulation.
(37)     In light of the above, it
is considered appropriate to assess the benefit under the DEPBS as being the
sum of the credits earned on all export transactions made under this scheme
during the RIP. 
(38)     Where justified claims were
made, fees necessarily incurred to obtain the subsidy were deducted from the
credits so established to arrive at the subsidy amounts as numerator, pursuant
to Article 7(1)(a) of the basic Regulation. 
(39)     In accordance with Article
7(2) of the basic Regulation these subsidy amounts have been allocated over the
total export turnover during the review investigation period as appropriate
denominator, because the subsidy is contingent upon export performance and it
was not granted by reference to the quantities manufactured, produced, exported
or transported. 
(40)     Based on the above, the
subsidy rate established in respect of this scheme for the applicant during the
RIP amounts to 6,7%.
3.3.        Export Oriented Units
('EOU') / Export Processing Zones ('EPZ') / Special Economic Zones ('SEZ')
(41)     In
the course of the investigation it was found that the applicant did not obtain
any benefits under EOU/EPZ/SEZ during the RIP. It was therefore not necessary
to further analyse these schemes in this investigation.
3.4.        Export Promotion Capital
Goods scheme (‘EPCGS’)
(a)     Legal basis
(42)     The detailed description of
EPCGS is contained in chapter 5 of FTP 04-09 and FTP 09-14 as well as in
chapter 5 of HOP I 04-09 and HOP I 09-14. 
(b)     Eligibility
(43)     Manufacturer-exporters,
merchant-exporters “tied to” supporting manufacturers and service providers are
eligible for this scheme. 
(c)     Practical
implementation
(44)     Under the condition of an
export obligation, a company is allowed to import capital goods (new and
second-hand capital goods up to 10 years old) at a reduced rate of duty. To
this end, the GOI issues, upon application and payment of a fee, an EPCGS
licence. The scheme provides for a reduced import duty rate of 5% applicable to
all capital goods imported under the scheme. In order to meet the export
obligation, the imported capital goods must be used to produce a certain amount
of export goods during a certain period. Under FTP 09-14 the capital goods can
be imported with 0% duty rate under the EPCGS but in such case the time period
for fulfilment of the export obligation is shorter. 
(45)     The EPCGS licence holder
can also source the capital goods indigenously. In such case, the indigenous
manufacturer of capital goods may avail himself of the benefit for duty free
import of components required to manufacture such capital goods. Alternatively,
the indigenous manufacturer can claim the benefit of deemed export in respect
of supply of capital goods to an EPCGS licence holder.
(46)     It was found that the
applicant used this scheme during the RIP.
(d)     Conclusion on
EPCGS
(47)     The
EPCGS provides subsidies within the meaning of Article 3(1)(a)(ii) and Article
3(2) of the basic Regulation. The duty reduction constitutes a financial
contribution by the GOI, since this concession decreases the GOI’s duty revenue
which would be otherwise due. In addition, the duty reduction confers a benefit
upon the exporter, because the duties saved upon importation improve the company’s
liquidity.
(48)     Furthermore, EPCGS is
contingent in law upon export performance, since such licences cannot be
obtained without a commitment to export. Therefore it is deemed to be specific
and countervailable under Article 4(4), first subparagraph, point (a) of the
basic Regulation. It has been claimed by the applicant
that EPCGS subsidies with regard to the purchase of capital goods where the
export obligation was already fulfilled before the RIP, should not anymore be
treated as contingent upon export performance. Therefore they should not be
treated as specific subsidies and should not be countervailed. However, this
claim has to be rejected. It has to be underlined that the subsidy itself was
contingent upon export performance i.e. it would not have been granted had the
company not accepted a certain export obligation.
(49)     EPCGS cannot be considered
a permissible duty drawback system or substitution drawback system within the
meaning of Article 3(1)(a)(ii) of the basic Regulation. Capital goods are not
covered by the scope of such permissible systems, as set out in Annex I, item
(i), of the basic Regulation, because they are not consumed in the production
of the exported products.
(e)     Calculation of
the subsidy amount
(50)     The subsidy amount was calculated,
in accordance with Article 7(3) of the basic Regulation, on the basis of the
unpaid customs duty on imported capital goods spread across a period which
reflects the normal depreciation period of such capital goods in the industry
concerned, i.e. 18,93 years. Interests were added to this amount in order to
reflect the full value of the benefit over time. The commercial interest rate
for local currency loans during the review investigation period in India was
considered appropriate for this purpose.
(51)     In accordance with Articles
7(2) and 7(3) of the basic Regulation this subsidy amount has been allocated
over the export turnover during the RIP as appropriate denominator, because the
subsidy is contingent upon export performance. 
(52)     The subsidy rate
established in respect of this scheme for the applicant during the RIP amounts
to 0,6%.
3.5.        Focus Market Scheme ('FMS')

(a)     Legal
basis
(53)     The detailed description of
FMS is contained in paragraph 3.9.1 to 3.9.2.2 of FTP 04-09 and paragraph
3.14.1 to 3.14.3 of FTP 09-14 and in paragraph 3.20 to 3.20.3 of HOP I 04-09
and paragraph 3.8 to 3.8.2 of HOP I 09-14.
(b)     Eligibility
(54)     Any manufacturer-exporter
or merchant-exporter is eligible for this scheme.
(c)     Practical
implementation
(55)     Under this scheme exports
of all products to countries notified under Appendix 37(C) of HOP I 04-09 and
HOP I 09-14 are entitled to duty credit equivalent to 2,5% of the FOB value of
products exported under this scheme. Certain type of export activities are
excluded from the scheme, e.g. exports of imported goods or transhipped goods,
deemed exports, service exports and export turnover of units operating under
special economic zones/export operating units. Also excluded from the scheme
are certain types of products, e.g. diamonds, precious metals, ores, cereals,
sugar and petroleum products.
(56)     The duty credits under FMS
are freely transferable and valid for a period of 24 months from the date of
issue of the relevant credit entitlement certificate. They can be used for
payment of custom duties on subsequent imports of any inputs or goods including
capital goods.
(57)     The credit entitlement
certificate is issued from the port from which the exports have been made and
after realisation of exports or shipment of goods. As long as the applicant
provides to the authorities copies of all relevant export documentation (e.g.
export order, invoices, shipping bills, bank realisation certificates), the GOI
has no discretion over the granting of the duty credits.
(58)     It was found that the
applicant used this scheme during the RIP.
(d)     Conclusion on
FMS
(59)     The FMS provides subsidies
within the meaning of Article 3(1)(a)(ii) and Article 3(2) of the basic
Regulation. A FMS duty credit is a financial contribution by the GOI, since the
credit will eventually be used to offset import duties, thus decreasing the
GOI’s duty revenue which would be otherwise due. In addition, the FMS duty
credit confers a benefit upon the exporter, because it improves its liquidity. 
(60)     Furthermore, FMS is
contingent in law upon export performance, and therefore deemed to be specific
and countervailable under Article 4(4), first subparagraph, point (a) of the
basic Regulation.
(61)     This scheme cannot be
considered a permissible duty drawback system or substitution drawback system
within the meaning of Article 2(1)(a)(ii) of the basic Regulation. It does not
conform to the strict rules laid down in Annex I point (i), Annex II
(definition and rules for drawback) and Annex III (definition and rules for
substitution drawback) of the basic Regulation. An exporter is under no
obligation to actually consume the goods imported free of duty in the
production process and the amount of credit is not calculated in relation to
actual inputs used. There is no system or procedure in place to confirm which
inputs are consumed in the production process of the exported product or
whether an excess payment of import duties occurred within the meaning of point
(i) of Annex I and Annexes II and III of the basic Regulation. An exporter is
eligible for FMS benefits regardless of whether it imports any inputs at all.
In order to obtain the benefit, it is sufficient for an exporter to simply
export goods without demonstrating that any input material was imported. Thus,
even exporters which procure all of their inputs locally and do not import any
goods which can be used as inputs are still entitled to benefit from FMS.
Moreover, an exporter can use FMS duty credits in order to import capital goods
although capital goods are not covered by the scope of permissible duty
drawback systems, as set out in Annex I point (i) of the basic Regulation,
because they are not consumed in the production of the exported products.
(e)     Calculation of the subsidy amount
(62)     The amount of
countervailable subsidies was calculated on the basis of the benefit conferred
on the recipient, which is found to exist during the RIP as booked by the applicant
on an accrual basis as income at the stage of export transaction. In accordance
with Article 7(2) and 7(3) of the basic Regulation this subsidy amount
(nominator) has been allocated over the export turnover during the RIP as
appropriate denominator, because the subsidy is contingent upon export
performance and it was not granted by reference to the quantities manufactured,
produced, exported or transported.
(63)     The subsidy rate
established with regard to this scheme during the RIP for the applicant amounts
to less than 0,1%.
3.6.        Export Credit Scheme
('ECS')
(64)     It was established that the
applicant received the benefit of preferential interest rates for its export
financing during the RIP until 30 June 2011. The legal basis for this
preferential interest rate is set out in Master Circular on Rupee / Foreign
Currency Export Credit & Customer Services to Exporters DBOD No DIR.(Exp).
BC 07/04.02.02/2009-10 of the Reserve Bank of India (RBI), which is addressed
to all commercial banks in India.
(65)     On 1 July 2011, the terms
and conditions of the ECS were revised by Master Circular on Rupee / Foreign
Currency Export Credit & Customer Services to Exporters DBOD No.DIR.
(Exp).BC.04/04.02.002/2011-12. The revised conditions did not confer any
benefits on the applicant. In accordance with Article 15(1) of the basic
Regulation, this scheme shall therefore not be countervailed.
3.7.        Income Tax Exemption Scheme
('ITES')
(66)     In the course of the
investigation it was found that the applicant did not obtain any benefits under
ITES during the RIP. It was therefore not necessary to further analyse this
scheme in this investigation.
3.8.        West Bengal Incentive
Scheme 1999 ('WBIS 1999')
(67)     The State of West Bengal
grants to eligible industrial enterprises incentives in the form of a number of
benefits, including a remission of sales tax and central sales tax on sales of
finished goods, in order to encourage the industrial development of
economically backward areas within this State.
(a)     Legal basis
(68)     The detailed description of
this scheme as applied by the Government of West Bengal ('GOWB') is set out in Notification
No 580-CI/H of 22 June1999 of the GOWB Commerce & Industries Department.
(b)     Eligibility
(69)     Companies setting up a new
industrial establishment or making a large-scale expansion of an existing
industrial establishment in backward areas are eligible to avail benefits under
this scheme. Nevertheless, an exhaustive list of ineligible industries
(negative list of industries) exists preventing companies in certain fields of
operations from benefiting from the incentives.
(c)     Practical
implementation
(70)     Under this scheme,
companies must invest in backward areas. These areas, which represent certain
territorial units in West Bengal are classified according to their economic
development into different categories while at the same time there are developed
areas excluded from the application of the incentive schemes. The main criteria
to establish the amount of the incentives are the size of the investment and
the area in which the enterprise is or will be located.
(d)     Conclusion
(71)     This scheme provides
subsidies within the meaning of Articles 3(1)(a)(ii) and 3(2) of the basic
Regulation. It constitutes a financial contribution by the GOWB, since the
incentives granted, in the present case sales tax and central sales tax remissions
on sales of finished goods, decrease tax revenue which would be otherwise due.
In addition, these incentives confer a benefit upon a company, because they
improve its financial situation since taxes otherwise due are not paid.
(72)     Furthermore, this scheme is
regionally specific in the meaning of Articles 4(2)(a) and 4(3) of the basic
Regulation since it is only available to certain companies having invested
within certain designated geographical areas within the jurisdiction of the
State concerned. It is not available to companies located outside these areas
and, in addition, the level of benefit is differentiated according to the area
concerned.
(73)     The WBIS 1999 is therefore
countervailable.
(e)     Calculation of the subsidy amount
(74)     The subsidy amount was
calculated on the basis of the amount of the sales tax and central sales tax on
sales of finished goods normally due during the review investigation period but
which remained unpaid under this scheme. In accordance with Article 7(2) of the
basic Regulation, the amount of subsidy (numerator) have then been allocated
over total sales during the review investigation period as appropriate
denominator, because the subsidy is not export contingent and it was not
granted by reference to the quantities manufactured, produced, exported or
transported. The subsidy rate obtained amounted to 1,4%.
3.9.        Amount of countervailable
subsidies
(75)     The amount of
countervailable subsidies determined in accordance with the provisions of the
basic Regulation, expressed ad valorem, for the applicant amounts to 8,7%.
These amounts of subsidisation exceed the de minimis threshold mentioned
under Article 14(5) of the basic Regulation.
(76)     The levels of subsidisation
established in the current procedure for the applicant is as follows: 
 SCHEMES || DEPBS || EPCGS || FMS || WBIS || Total 
 Dhunseri Tea & Petrochem || 6,7% || 0,6% || < 0,1% || 1,4% || 8,7% 
(77)     It is therefore considered
that, pursuant to Article 19 of the basic Regulation, subsidisation continued
during the RIP.
3.10.      Lasting nature of changed
circumstances with regard to subsidisation
(78)     In accordance with Article
19(4) of the basic Regulation, it was also examined whether the changed
circumstances could reasonably be considered to be of a lasting nature.
(79)     It was established that,
during the RIP, the applicant continued to benefit from countervailable
subsidisation by the GOI. Further, the subsidy rate found during the present
review is lower than that established during the last review investigation. It
was equally established that the changes claimed by the applicant in recital (7)
above did indeed take place. Indeed, the applicant did no longer benefit from
the EOU scheme during the RIP as indicated in recital (41) above.
(80)     However, it was also
established that the most important scheme used by the applicant during the RIP
(i.e. DEBPS) was discontinued on 30 September 2011, and another scheme not used
during the RIP (i.e. duty drawback) is currently used by the applicant. It is
therefore evident that the situation prevailing during the RIP is not of a
lasting nature, as it has already significantly changed in the meantime.
(81)     It is therefore concluded
that the partial interim review investigation should be terminated without
amending the countervailing measures in force. The applicant as well as the
other parties concerned were informed of the facts and considerations on the
basis of which it was intended to propose the termination of the investigation,
HAS ADOPTED THIS REGULATION: 
Article 1
The partial interim review of the countervailing
measures applicable to imports of polyethylene terephthalate currently falling
within CN code 3907 60 20 and originating, inter alia, in India, is
hereby terminated without amending the measures in force.
Article 2
This Regulation shall enter into force on
the day following its publication in the Official Journal of the European
Union. 
This Regulation shall be binding
in its entirety and directly applicable in all Member States.
Done at Brussels, 
                                                                       For
the Council
                                                                       The
President
[1]               OJ L 188, 18.7.2009, p. 93.
[2]               OJ L 301, 30.11.2000, p. 1.
[3]               OJ L 266, 11.10.2005, p. 1.
[4]               OJ L 59, 27.2.2007, p. 34.
[5]               OJ L 340, 19.12.2008, p. 1.
[6]               OJ C 335, 11.12.2010, p. 7.
[7]               OJ L 301, 30.11.2000, p. 21.
[8]               OJ L 343, 22.12.2009, p. 51. 
[9]               OJ L 266, 11.10.2005, p. 10.
[10]             OJ L 59, 27.2.2007, p. 1.
[11]             OJ C 335, 11.12.2010, p. 6.
[12]             OJ L 266, 11.10.2005, p. 62.
[13]             OJ C 102, 2.4.2011, p.15.
[14]             OJ C 102, 2.4.2011, p.18.