HTML PUBLIC "-//W3C//DTD HTML 4.01 Transitional//EN"L 58/18
EN
Official Journal of the European Union
3.3.2011
COUNCIL IMPLEMENTING REGULATION (EU) No 206/2011
of 28 February 2011
amending Regulation (EC) No 367/2006 imposing a definitive countervailing duty on imports of
polyethylene terephthalate (PET) film originating in India
THE COUNCIL OF THE EUROPEAN UNION,
(4) In September 2007, by Regulation (EC) No
1124/2007 ( 5 ), the Council, following a partial interim
review concerning the subsidisation of another Indian
Having regard to the Treaty on the Functioning of the European
PET film producer, amended the definitive countervailing
Union,
duty imposed on this company by Regulation (EC) No
367/2006.
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
(5) In
January
2009,
by
Regulation
(EC)
No
15/2009
( 6 ), the
basic Regulation), and in particular Articles 15(1), 19(1) and
Council, following a partial interim review initiated by
22(1) thereof,
the Commission on its own initiative concerning the
subsidisation of five Indian PET film producers,
amended the definitive countervailing duty imposed on
Having regard to the proposal submitted by the European
these companies by Regulation (EC) No 367/2006 and
Commission (the Commission) after consulting the Advisory
the definitive anti-dumping duties imposed by Regulation
Committee,
(EC) No 1292/2007 ( 7 ).
Whereas:
(6)
In June 2010, by implementing Regulation (EU) No
A. PROCEDURE
579/2010 ( 8 ), the Council, following a partial interim
review concerning the subsidisation of an Indian PET
1. Previous investigation and existing countervailing
film producer, amended the definitive countervailing
measures
duty imposed on this company by Regulation (EC)
367/2006.
(1) In December 1999, by Regulation (EC) No
2597/1999 ( 2 ), the Council imposed a definitive counter
vailing duty on imports of polyethylene terephthalate
(PET) film (the product concerned) currently falling
(7) It
should
be
noted
that
Vacmet
India
Limited
is
currently
within CN codes ex 3920 62 19 and ex 3920 62 90,
subject to a countervailing duty of 19,1 % on the basis of
originating in India. The measures took the form of an
Regulation (EC) 367/2006.
ad valorem countervailing duty, ranging between 3,8 %
and 19,1 % imposed on imports from individually
named exporters, with a residual duty rate of 19,1 %
2. Existing anti-dumping measures
imposed on imports of the product concerned from all
other companies. The investigation period of the original
(8) It
should
be
noted
that
Vacmet
India
Limited
is
subject
to
investigation was 1 October 1997 to 30 September
a residual anti-dumping duty of 17,3 % on the basis of
1998.
Regulation (EC) 1292/2007.
(2) In
March
2006,
by
Regulation
(EC)
No
367/2006
( 3 )
(Regulation (EC) No 367/2006), the Council, following
3. Initiation of a partial interim review
an expiry review pursuant to Article 18 of the basic
Regulation, maintained the definitive countervailing
(9) On
7
August
2009,
the
Commission
received
a
request
duty imposed by Regulation (EC) No 2597/1999 on
for a partial interim review pursuant to Article 19 of the
imports of PET film originating in India. The review
basic Regulation. The request, limited in scope to the
investigation period was 1 October 2003 to
examination of subsidisation, was lodged by Vacmet
30 September 2004.
India Limited, an exporting producer from India (the
applicant). In its request, the applicant claimed that the
circumstances on the basis of which measures were
(3) In
August
2006,
by
Regulation
(EC)
No
1288/2006
( 4 ),
imposed have changed and that these changes are of a
the Council, following an interim review concerning the
lasting nature. The applicant provided prima facie
subsidisation of an Indian PET film producer, amended
evidence that the continued imposition of the measure
the definitive countervailing duty imposed on this
at its current level is no longer necessary to offset subsi
company by Regulation (EC) No 367/2006.
disation.
( 1 ) OJ L 188, 18.7.2009, p. 93.
( 5 ) OJ L 255, 29.9.2007, p. 1.
( 2 ) OJ L 316, 10.12.1999, p. 1.
( 6 ) OJ L 6, 10.1.2009, p. 1.
( 3 ) OJ L 68, 8.3.2006, p. 15.
( 7 ) OJ L 288, 6.11.2007, p. 1.
( 4 ) OJ L 236, 31.8.2006, p. 1.
( 8 ) OJ L 168, 2.7.2010, p. 1.

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EN
3.3.2011 Official
Journal
of
the
European
Union L
58/19
(10) Having determined, after consulting the Advisory
(Regulation (EC) No 367/2006), namely polyethylene
Committee, that sufficient evidence existed to justify
terephthalate (PET) film, originating in India, currently
the initiation of a partial interim review, the Commission
falling within CN codes ex
3920
62
19 and
announced on 14 January 2010, by a notice published in
ex 3920 62 90.
the Official Journal of the European Union ( 1 ) (notice of
initiation), the initiation of a partial interim review, in
accordance with Article 19 of the basic Regulation,
limited in scope to the examination of subsidisation in
2. Like product
respect of the applicant.
(18) As in previous investigations, this investigation has
shown that PET film produced in India and exported
to the Union and the PET film produced and sold
(11) The
partial
interim
review
investigation
was
also
to
assess
domestically on the Indian market, as well as the PET
the need, depending on the review findings, to amend
film produced and sold in the EU by the Union
the rate of duty currently applicable to imports of the
producers have the same basic physical and chemical
product concerned from exporting producers in the
characteristics and the same basic uses.
country concerned not individually mentioned in
Article 1(2) of Regulation (EC) No 367/2006, i.e. the
duty rate as applying to ‘all other companies’ in India.
(19) These
products are therefore considered to be alike
within the meaning of Article 2(c) of the basic Regu
lation.
(12) The
Commission
also
announced
on
14
January
2010,
by a notice of initiation published in the Official Journal of
the European Union ( 2 ), the initiation of a partial interim
review of the anti-dumping measures limited in scope to
C. SUBSIDISATION
the examination of dumping as far as the applicant is
concerned.
1. Introduction
Nationwide Schemes
4. Investigation
(20) On the basis of the information submitted by the
applicant and the Union industry, the following
(13) The investigation of the level of subsidisation covered the
schemes, which allegedly involve the granting of
period from 1 January 2009 to 31 December 2009
subsidies, were investigated:
(‘review investigation period’ or ‘RIP’).
(a) Duty Entitlement Passbook Scheme;
(14) The
Commission
officially
informed
the
applicant,
the
Government of India (GOI) and the Union industry of
the initiation of the partial interim investigation.
Interested parties were given the opportunity to make
(b) Export Promotion Capital Goods Scheme;
their views known in writing and to be heard.
(c) Advance Authorisation Scheme (formerly known as
(15) In
order
to
obtain
the
information
necessary
for
its
inves
Advance Licence Scheme);
tigation, the Commission sent a questionnaire to the
applicant. In addition, a questionnaire was sent to the
GOI.
(d) Capital Subsidies.
(16) While the applicant fully cooperated in the investigation,
the relevant authorities of the GOI did not submit a
(21) The
schemes
(a)
to
(c)
specified
above
are
based
on
the
questionnaire reply within the deadline. The Commission
Foreign Trade (Development and Regulation) Act 1992
sought and verified all information it deemed necessary
(No 22 of 1992) which entered into force on 7 August
for the determination of subsidisation. A verification visit
1992 (Foreign Trade Act). The Foreign Trade Act author-
was carried out at the premises of the applicant.
ises the GOI to issue notifications regarding the export
and import policy. These are summarised in ‘Foreign
Trade Policy’ documents, which are issued by the
B. PRODUCT CONCERNED AND LIKE PRODUCT
Ministry of Commerce every 5 years and updated
regularly. Two Foreign Trade Policy documents are
1. Product concerned
relevant to the RIP of this case, namely FT-policy 04-
09 and FT-policy 09-14. In addition, the GOI also sets
(17) The product confirmed by this review is the same as that
out the procedures governing the FT-policy 04-09 and
defined in the Regulation imposing the measures in force
FT-policy 09-14 in a ‘Handbook of Procedures, Volume I’
(‘HOP I 04-09’ and ‘HOP I 09-14’ respectively). The
( 1 ) OJ C 8, 14.1.2010, p. 29.
Handbook of Procedures is also updated on a regular
( 2 ) OJ C 8, 14.1.2010, p. 27.
basis.

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L 58/20
EN
Official Journal of the European Union
3.3.2011
(22) The
scheme
specified
above
under
point
(d)
is
managed
(28) Application
for
DEPBS
credits
are
electronically
filed
and
by the authorities of the State of Uttar Pradesh.
can cover an unlimited amount of export transactions.
De facto no strict deadlines apply to DEPBS credits. The
electronic system used to manage DEPBS does not auto
matically exclude export transactions exceeding the
2. Duty Entitlement Passbook Scheme (DEPBS)
submission deadline mentioned in chapter 4.47 of the
HOP I 04-09 and 09-14. Furthermore, as clearly
(a) Legal Basis
provided in chapter 9.3 of the HOP I 04-09 and 09-
14, applications received after the expiry of submission
(23) The detailed description of the DEPBS is contained in
deadlines can always be considered subject to the
paragraphs 4.3 of the FT-policy 04-09 and FT-policy
imposition of a minor penalty fee (i.e. 10 % of the
09-14 as well as in chapter 4 of the HOP I 04-09 and
entitlement).
of the HOP I 09-14.
(29) It
was
found
that
the
applicant
used
this
scheme
during
(b) Eligibility
the RIP.
(24) Any manufacturer-exporter or merchant-exporter is
eligible for this scheme.
(d) Conclusions on the DEPBS
(30) The
DEPBS
provides
subsidies
within
the
meaning
of
(c) Practical implementation of the DEPBS
Article 3(1)(a)(ii) and Article 3(2) of the basic Regulation.
(25) An
exporter
can
apply
for
DEPBS
credits
which
are
A DEPBS credit is a financial contribution by the GOI
calculated as a percentage of the value of products
since the credit will eventually be used to offset import
exported under this scheme. Such DEPBS rates have
duties, thus decreasing the GOI’s duty revenue which
been established by the Indian authorities for most
would otherwise be due. In addition, the DEPBS credit
products, including the product concerned. They are
confers a benefit upon the exporter because it improves
determined on the basis of Standard Input Output
its liquidity.
Norms (SIONs) taking into account a presumed import
content of inputs in the export product and the customs
duty incidence on such presumed imports, regardless of
whether import duties have actually been paid or not.
(31) Furthermore,
the DEPBS 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.
(26) 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
(32) This
scheme
cannot
be
considered
a
permissible
duty
drawback system or substitution drawback system
exported, the Indian customs authorities issue an
within the meaning of Article 3(1)(a)(ii) of the basic
export shipping bill during the dispatch procedure. This
Regulation. It does not conform to the rules laid down
document shows, inter alia, the amount of DEPBS credit
in Annex I item (i), Annex II (definition and rules for
which is to be granted for that export transaction. At this
drawback) and Annex III (definition and rules for substi
point in time, the exporter knows the benefit it will
tution drawback) to the basic Regulation. In particular, an
receive. Once the customs authorities issue an export
exporter is under no obligation to actually consume the
shipping bill, the GOI has no discretion over the
goods imported free of duty in the production process
granting of a DEPBS credit.
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
(27) It
was
found
that
in
accordance
with
Indian
accounting
product or whether an excess payment of import
standards, DEPBS credits can be booked on an accrual
duties occurred within the meaning of item (i) of
basis as income in the commercial accounts, upon
Annex I, and Annexes II and III to the basic Regulation.
fulfilment of the export obligation. Such credits can be
Lastly, an exporter is eligible for the DEPBS benefits
used for payment of customs duties on subsequent
regardless of whether it imports any inputs at all. In
imports of any goods — except capital goods and
order to obtain the benefit, it is sufficient for an
goods where there are import restrictions. Goods
exporter to simply export goods without demonstrating
imported against such credits can be sold on the
that any input material was imported. Thus, even
domestic market (subject to sales tax) or used otherwise.
exporters which procure all of their inputs locally and
DEPBS credits are freely transferable and valid for a
do not import any goods which can be used as inputs
period of 12 months from the date of issue.
are still entitled to benefit from the DEPBS.

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EN
3.3.2011 Official
Journal
of
the
European
Union L
58/21
(e) Calculation of the subsidy amount
and payment of a fee. Since April 2000, the scheme
provides for a reduced import duty rate of 5 % applicable
(33) In
accordance
with
Article
3(2)
and
Article
5
of
the
basic
to all capital goods imported under the scheme.
Regulation and the calculation methodology used for this
scheme in Regulation (EC) No 367/2006, the amount of
countervailable subsidies was calculated in terms of the
benefit conferred on the recipient found to exist during
(39) The
EPCGS
licence
holder
can
also
source
the
capital
the RIP. In this regard, it was considered that the benefit
goods indigenously. In such case, the indigenous manu
is conferred on the recipient at the point in time when
facturer of capital goods may avail himself of the benefit
an export transaction is made under this scheme. At that
for duty free import of components required to manu
moment, the GOI is liable to forego the customs duties,
facture such capital goods. Alternatively, the indigenous
which constitutes a financial contribution within the
manufacturer can claim the benefit of deemed export in
meaning of Article 3(1)(a)(ii) of the basic Regulation.
respect of supply of capital goods to an EPCGS licence
Once the customs authorities issue an export shipping
holder.
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
(40) It
was
found
that
the
applicant
used
this
scheme
during
subsidy. In the light of the above, it is considered appro
the RIP.
priate 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.
(d) Conclusion on EPCG Scheme
(41) The
EPCGS
provides
subsidies
within
the
meaning
of
Article 3(1)(a)(ii) and Article 3(2) of the basic Regulation.
(34) Where justified claims were made, fees necessarily
The duty reduction constitutes a financial contribution by
incurred to obtain the subsidy were deducted from the
the GOI since this concession decreases the GOI’s duty
credits so established to arrive at the subsidy amount as
revenue, which would otherwise be due. In addition, the
numerator, pursuant to Article 7(1)(a) of the basic Regu
duty reduction confers a benefit upon the exporter
lation. In accordance with Article 7(2) of the basic Regu
because the duties saved upon import improve its
lation this subsidy amount has been allocated over the
liquidity.
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,
(42) Furthermore,
the EPCGS is contingent in law upon
produced, exported or transported.
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
(35) The
subsidy
rate
established
in
respect
of
this
scheme
for
Regulation.
the applicant during the RIP amounts to 7,9 %.
(43) This
scheme
cannot
be
considered
a
permissible
duty
3. Export Promotion Capital Goods Scheme
drawback system or substitution drawback system
(EPCGS)
within the meaning of Article 3(1)(a)(ii) of the basic
Regulation. Capital goods are not covered by the scope
(a) Legal basis
of such permissible systems, as set out in Annex I, item
(i), to the basic Regulation because they are not
(36) The detailed description of the EPCGS is contained in
chapter 5 of the FT-policy 04-09 and of the FT-policy
consumed in the production of the exported products.
09-14 as well as in chapter 5 of the HOP I 04-09 and of
the HOP I 09-14.
(e) Calculation of the subsidy amount
(44) The
subsidy
amount
was
calculated,
in
accordance
with
(b) Eligibility
Article 7(3) of the basic Regulation, on the basis of the
unpaid customs duty on imported capital goods spread
(37) Manufacturer-exporters, merchant-exporters ‘tied to’
across a period which reflects the normal depreciation
supporting manufacturers and service providers are
period of such capital goods in the industry concerned.
eligible for this scheme.
In accordance with the established practice, the amount
so calculated, which is attributable to the RIP, has been
adjusted by adding interest during this period in order to
(c) Practical implementation
reflect the full value of the benefit over time. The
commercial interest rate during the review investigation
(38) Under
the
condition
of
an
export
obligation,
a
company
period in India was considered appropriate for this
is allowed to import capital goods (new and — since
purpose. Where justified claims were made, fees
April 2003 — second-hand capital goods up to 10
necessarily incurred to obtain the subsidy were
years old) at a reduced rate of customs duty. To this
deducted in accordance with Article 7(1)(a) of the basic
end, the GOI issues an EPCGS licence upon application
Regulation.

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L 58/22
EN
Official Journal of the European Union
3.3.2011
(45) In accordance with Article 7(2) and 7(3) of the basic
product. ‘Physical’ in this context means that the
Regulation, this subsidy amount has been allocated
export product has to leave Indian territory. An
over the export turnover during the RIP as the appro
import allowance and export obligation including
priate denominator because the subsidy is contingent
the type of export product are specified in the
upon export performance and was not granted by
licence;
reference to the quantities manufactured, produced,
exported or transported.
(46) As regards imports made under this scheme, the investi
(ii) Annual requirement: Such an authorisation is not
gation revealed that there were a number of items which
linked to a specific export product, but to a wider
could be used for both production of the product
product group (e.g. chemical and allied products).
concerned as well as for the production of other
The licence holder can — up to a certain value
products. However, it was noted that some items were
threshold set by its past export performance —
used in a factory unit which is solely used for the
import duty-free any input to be used in manufac
production of PET film. Therefore, in terms of calculation
turing any of the items falling under such a product
of the benefit to the applicant, the denominator to be
group. It can choose to export any resulting product
used for these items would be the export turnover of the
falling under the product group using such duty-
product concerned and not the total export turnover.
exempt material;
(47) The
subsidy
rate
established
in
respect
of
this
scheme
for
the applicant for the RIP amounts to 2,4 %.
(iii) Intermediate supplies: This sub-scheme covers cases
4. Advance Authorisation Scheme (AAS)
where two manufacturers intend to produce a
single export product and divide the production
(a) Legal basis
process. The manufacturer-exporter who produces
the intermediate product can import duty-free
(48) The detailed description of the scheme is contained in
input materials and can obtain for this purpose an
paragraphs 4.1.1 to 4.1.14 of the FT-policy 04-09 and
AAS for intermediate supplies. The ultimate exporter
FT-policy 09-14 and chapters 4.1 to 4.30 of the HOP I
finalises the production and is obliged to export the
04-09 and of the HOP I 09-14. This scheme was called
finished product;
Advance Licence Scheme during the previous investi
gation that led to the imposition, pursuant to Regulation
(EC) No 367/2006, of the definitive countervailing duty
currently in force.
(iv) Deemed exports: This sub-scheme allows a main
contractor to import inputs free of duty which are
(b) Eligibility
required in manufacturing goods to be sold as
‘deemed exports’ to the categories of customers
(49) The
AAS
consists
of
six
sub-schemes,
as
described
in
more detail in recital 50. Those sub-schemes differ,
mentioned in paragraph 8.2(b) to (f), (g), (i) and (j)
inter alia, in the scope of eligibility. Manufacturer-
of the FT-policy 04-09. Deemed exports refer to
exporters and merchant-exporters ‘tied to’ supporting
those transactions in which the goods supplied do
manufacturers are eligible for the AAS physical exports
not leave the country. A number of categories of
and for the AAS for annual requirement sub-schemes.
supply is regarded as deemed exports provided the
Manufacturer-exporters supplying the ultimate exporter
goods are manufactured in India, e.g. supply of
are eligible for AAS for intermediate supplies. Main
goods to an export-oriented unit (EOU) or to a
contractors which supply to the ‘deemed export’
company situated in a special economic zone (SEZ);
categories mentioned in paragraph 8.2 of the FT-policy
04-09, such as suppliers of an export oriented unit
(EOU), are eligible for the AAS deemed export sub-
scheme. Eventually, intermediate suppliers to manu
facturer-exporters are eligible for ‘deemed export’
(v) Advance Release Order (ARO): The AAS holder
benefits under the sub-schemes Advance Release Order
intending to source the inputs from indigenous
(ARO) and back to back inland letter of credit.
sources, in lieu of direct import, has the option to
source them against AROs. In such cases the
Advance Authorisations are validated as AROs and
(c) Practical implementation
are endorsed to the indigenous supplier upon
delivery of the items specified therein. The
(50) Advance
authorisations
can
be
issued
for:
endorsement of the ARO entitles the indigenous
supplier to the benefits of deemed exports as set
out in paragraph 8.3 of the FT-policy 04-09 (i.e.
(i) Physical exports: This is the main sub-scheme. It
AAS for intermediate supplies/deemed export,
allows for duty-free import of input materials for
deemed export drawback and refund of terminal
the production of a specific resulting export
excise duty). The ARO mechanism refunds taxes

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EN
3.3.2011 Official
Journal
of
the
European
Union L
58/23
and duties to the supplier instead of refunding the
(54) The
current
interim
review
investigation
established
that
same to the ultimate exporter in the form of
the verification requirements stipulated by the Indian
drawback/refund of duties. The refund of taxes/duties
authorities were not honoured and not yet tested in
is available both for indigenous inputs as well as
practice. The applicant did not maintain a system
imported inputs;
whereby it could be verified which inputs were
consumed in the production of the exported product
and in what amounts, as stipulated by the FT-policy
(Appendix 23) and in accordance with Annex II(II)(4)
(vi) Back to back inland letter of credit: This sub-scheme
to the basic Regulation. In fact, there were no records
again covers indigenous supplies to an Advance
of actual consumption.
Authorisation holder. The holder of an Advance
Authorisation can approach a bank for opening an
inland letter of credit in favour of an indigenous
supplier. The authorisation will be validated by the
(55) Changes
in
the
administration
of
the
FT-policy
04
-
09,
bank for direct import only in respect of the value
which became effective in autumn of 2005 (mandatory
and volume of items being sourced indigenously
sending of the consumption register to the Indian
instead of importation. The indigenous supplier
authorities in the context of the redemption procedure)
will be entitled to deemed export benefits as set
has not yet been applied in the case of the applicant.
out in paragraph 8.3 of the FT-policy 04-09 (i.e.
Thus, the de facto implementation of this provision
AAS for intermediate supplies/deemed export,
could not be verified at this stage.
deemed export drawback and refund of terminal
excise duty).
(d) Conclusion on the AAS
(56) The
exemption
from
import
duties
is
a
subsidy
within
(51) The
applicant
received
concessions
under
the
AAS
linked
the meaning of Article 3(1)(a)(ii) and Article 3(2) of the
to the product concerned during the RIP. The applicant
basic Regulation, i.e. a financial contribution of the GOI
made use of one of the sub-schemes, i.e. AAS physical
which conferred a benefit upon the investigated exporter.
exports. It is therefore not necessary to establish the
countervailability of the remaining unused sub-schemes.
(57) In
addition,
AAS
physical
exports
is
clearly
contingent
in
law upon export performance, and therefore deemed to
(52) For
verification
purposes
by
the
Indian
authorities,
an
be specific and countervailable under Article 4(4), first
Advance Authorisation holder is legally obliged to
subparagraph, point (a) of the basic Regulation.
maintain ‘a true and proper account of consumption
Without an export commitment a company cannot
and utilisation of duty-free imported/domestically
obtain benefits under this scheme.
procured goods’ in a specified format (chapters 4.26,
4.30 and Appendix 23 HOP I 04-09 and HOP I 09-
14), i.e. an actual consumption register. This register
has to be verified by an external chartered
(58) The
sub-scheme
used
in
the
present
case
cannot
be
accountant/cost and works accountant who issues a
considered permissible duty drawback system or substi
certificate stating that the prescribed registers and
tution drawback system within the meaning of
relevant records have been examined and the information
Article 3(1)(a)(ii) of the basic Regulation. It does not
furnished under Appendix 23 is true and correct in all
conform to the rules laid down in Annex I item (i),
respects.
Annex II (definition and rules for drawback) and Annex
III (definition and rules for substitution drawback) to the
basic Regulation. The GOI did not effectively apply either
its new or its old verification system or procedure to
(53) With regard to the sub-scheme used during the RIP by
confirm whether and in what amounts inputs were
the applicant, i.e. physical exports, the import allowance
consumed in the production of the exported product
and the export obligation are fixed in volume and value
(Annex II(II)(4) to the basic Regulation and, in the case
by the GOI and are documented on the Authorisation. In
of substitution drawback schemes, Annex III(II)(2) to the
addition, at the time of import and of export, the corre
basic Regulation). The SIONs for the product concerned
sponding transactions are to be documented by
were not sufficiently precise. The SIONs themselves
Government officials on the Authorisation. The volume
cannot be considered a verification system of actual
of imports allowed under the AAS is determined by the
consumption because the design of those standard
GOI on the basis of Standard Input Output Norms
norms does not enable the GOI to verify with sufficient
(SIONs) which exist for most products including the
precision what amounts of inputs were consumed in the
product concerned. Imported input materials are not
export production. In addition, the GOI did not carry out
transferable and have to be used to produce the
a further examination based on actual inputs involved,
resultant export product. The export obligation must be
although this would normally need to be carried out in
fulfilled within a prescribed time frame after issuance of
the absence of an effectively applied verification system
the licence (24 months with two possible extensions of 6
(Annex II(II)(5) and Annex III(II)(3) to the basic Regu
months each).
lation).

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L 58/24
EN
Official Journal of the European Union
3.3.2011
(59) The
sub-scheme
is
therefore
countervailable.
The State schemes fall under the heading ‘Package
Scheme of Incentives’ as there can be different kinds of
incentives involved. The previous investigation estab
lished that a company’s entitlement to benefits could
be stipulated in the ‘Eligibility Certificate’ or ‘Entitlement
(e) Calculation of the subsidy amount
Certificate’. However, as in the present investigation,
there could also be ad hoc subsidies such as capital
(60) In
the
absence
of
permitted
duty
drawback
systems
or
subsidies.
substitution drawback systems, the countervailable
benefit is the remission of total import duties normally
due upon import of inputs. In this respect, it is noted
that the basic Regulation does not only provide for the
countervailing of an ‘excess’ remission of duties.
(b) Eligibility
According to Article 3(1)(a)(ii) and Annex I(i) to the
basic Regulation, only when the conditions of Annexes
(64) In
order
to
be
eligible,
companies
must,
as
a
general
rule,
invest in less developed areas of a state either by setting
II and III to the basic Regulation are met can the excess
up a new industrial establishment or by making a large
remission of duties be countervailed. However, these
scale capital investment or diversification of an existing
conditions were not fulfilled in the present case. Thus,
industrial establishment.
if an adequate monitoring process is not demonstrated,
the above exception for drawback schemes is not
applicable and the normal rule of the countervailing of
the amount of unpaid duties (revenue forgone) applies,
rather than of any purported excess remission. As set out
(c) Practical implementation
in Annexes II(II) and III(II) to the basic Regulation, the
burden is not upon the investigating authority to
(65) According to the response to the questionnaire, the
applicant received in 2009 a significant amount as
calculate such excess remission. To the contrary,
capital subsidy for setting up new production facilities
according to Article 3(1)(a)(ii) of the basic Regulation,
by the Government of Uttar Pradesh (GUP). It was
the investigating authority only has to establish sufficient
explained that this capital subsidy received is linked to
evidence to refute the appropriateness of an alleged
the setting up of new production facilities, i.e. to cover
verification system.
expenses for investments made by the applicant.
According to the applicant, it was a pure subsidy in
the form of a grant to improve equity.
(61) The
subsidy
amount
for
the
applicant
which
used
the
AAS was calculated on the basis of import duties
forgone (basic customs duty and special additional
(66) The
investigation also revealed that the applicant is
customs duty) on the material imported under the sub-
eligible for refunds of VAT and Central Sales Tax (CST)
scheme during the RIP (numerator). In accordance with
from the Commercial Tax Department of Uttar Pradesh
Article 7(1)(a) of the basic Regulation, fees necessarily
because of investments earlier made. In the ‘Eligibility
incurred to obtain the subsidy were deducted from the
Certificate’ there is a cap which the company is able to
subsidy amount where justified claims were made. In
claim. The scheme was used by the company over 4
accordance with Article 7(2) of the basic Regulation,
years. On a monthly basis, refunds of paid VAT and
this subsidy amount was allocated over the export
CST charged on intra-State and inter-State sales
turnover of the product concerned during the RIP as
respectively were requested, including during the RIP.
appropriate denominator because the subsidy is
contingent upon export performance and was not
granted by reference to the quantities manufactured,
produced, exported or transported.
(d) Conclusion
(67) The
capital
subsidy
is
a
direct
transfer
of
funds,
i.e.
a
grant to the applicant. It is a subsidy within the
meaning of Article 3(1)(a)(i) and Article 3(2) of the
(62) The
subsidy
rate
established
in
respect
of
this
scheme
for
basic Regulation. It is a financial contribution by the
the applicant for the RIP amounts to 0,2 %.
State Government of Uttar Pradesh which confers a
direct benefit upon the applicant.
5. Capital Subsidies (CS)
(68) The
refund
of
VAT
and
CST
provides
subsidies
within
(a) Legal basis
the meaning of Article 3(1)(a)(ii) and Article 3(2) of the
basic Regulation. The refund constitutes a financial
(63) In
previous
investigations
regarding
PET
film,
including
contribution by the State Government of Uttar Pradesh
the investigation that led to the imposition by Regulation
since this concession decreases the State Government’s
(EC) No 367/2006 of the definitive countervailing duty
tax revenue which would be otherwise due. In addition,
currently in force, several Indian State schemes involving
the tax refund confers a benefit upon the applicant
incentives granted to local companies were investigated.
because the tax saved improves its liquidity.

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EN
3.3.2011 Official
Journal
of
the
European
Union L
58/25
(69) The
subsidies
are
not
contingent
in
law
upon
export
Article 7(2) of the basic Regulation, the amount of
performance. However, due to the lack of cooperation
subsidy has then been allocated over the total turnover
of the authorities of the State Government of Uttar
of export and domestic sales during the RIP as the appro
Pradesh, the Commission was unable to make a firm
priate denominator because the subsidy is not export-
conclusion on this scheme as regards the specificity
contingent and was not granted by reference to the
and practical application of this law and the level of
quantities manufactured, produced, exported or trans
discretion the granting authority enjoys when deciding
ported.
on the applications. Indeed, it cannot be determined
with certainty whether Article 4(2), first subparagraph,
(71) Regarding
the
refunds
of
VAT
and
Central
Sales
Tax,
the
point (b) is fulfilled, given that it could not be established
subsidy amount was calculated on the basis of the
that the State Government of Uttar Pradesh applied
amount of refunds during the RIP. Pursuant to
objective criteria or conditions for granting the subsidy.
Article 7(2) of the basic Regulation, the amount of
Therefore, even if the scheme was shown not to be
subsidy (numerator) has then been allocated over the
specific in law, it is still not clear that it is not specific
total turnover of export and domestic sales during the
de facto. As a result it is deemed to be specific and
RIP as the appropriate denominator because the subsidy
countervailable under Article 4(2), first subparagraph,
is not export-contingent and it was not granted by
point (c) and Article 4(2), fourth subparagraph of the
reference to the quantities manufactured, produced,
basic Regulation.
exported or transported.
(e) Calculation of the subsidy amount
(72) Based
on
the
above,
the
subsidy
rate
established
for
the
(70) As
regards
the
capital
subsidy
received
for
setting
up
new
applicant in respect of these capital subsidies during the
production facilities, the subsidy amount was calculated,
RIP amounts to 0,5 %.
in accordance with Article 7(3) of the basic Regulation,
on the basis of the capital subsidy spread across a period
6. Amount of countervailable subsidies
which reflects the normal depreciation period/useful life
of capital goods in this industry because the subsidy can
(73) The
applicant
is
currently
subject
to
a
countervailing
duty
be linked to the acquisition of fixed assets. Interests were
of 19,1 %.
added to this amount in order to reflect the full value of
the benefit over time. The commercial interest rate
(74) During the present partial interim review, the amount of
during the review investigation period in India was
countervailable subsidies for the applicant, expressed ad
considered appropriate for this purpose. Pursuant to
valorem, was found to be 11,0 %, as listed hereunder:
SCHEME→ DEPBS
(*) EPCGS
(*) AAS
(*) CS Total
COMPANY↓
%
%
%
%
%
Vacmet India Limited 7,9 2,4 0,2 0,5 11,0
(*) Subsidies marked with an asterisk are export subsidies.
(75) Account taken of the above, it is concluded that the level
the applicant will continue to receive subsidies in the
of subsidisation with regard to the exporting producer
future of an amount which is less than the one to
concerned has decreased.
which it is currently subject.
7. Countervailing measures
(78) Since it has been demonstrated that the applicant is in
receipt of a much lower subsidisation than before and
(76) It
was
also
examined
whether
the
changed
circumstances
that it is likely to continue to receive subsidies of an
with regard to the examined schemes could be
amount which is lower than that determined in the
considered to be of a lasting nature.
original investigation, the level of the measure should
therefore be amended to reflect the new findings.
(77) The
investigation
confirmed
that
the
subsidy
amount
for
the applicant has decreased well below the duty rate
(79) In
view
of
the
above,
the
amended
countervailing
duty
currently applicable to it. This reduction in the overall
rate should be established at the new rate of subsidisation
subsidy level is mainly due to a significant drop of
found during the present partial interim review, as the
benefits which are available under the DEPBS. On the
injury margin calculated in the original anti-subsidy
basis of the above, there seem to be indications that
investigation remains higher.

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L 58/26
EN
Official Journal of the European Union
3.3.2011
(80) Pursuant
to
Article
24(1),
second
subparagraph
of
Regu
propose to amend the duty rate applicable to the
lation (EC) No 597/2009, no product shall be subject to
applicant and were given an opportunity to comment.
both anti-dumping and countervailing duties for the
purpose of dealing with one and the same situation
arising from dumping or from export subsidisation.
(83) The
oral
and
written
comments
submitted
by
the
parties
However, since the anti-dumping duty established for
were considered and, where appropriate, the definitive
the applicant as a result of the parallel anti-dumping
findings have been modified accordingly,
interim review is 0 % with regard to the product
concerned, this situation does not arise in the present
HAS ADOPTED THIS REGULATION:
case.
Article 1
(81) With
regard
to
the
rate
of
duty
currently
applicable
to
The table in Article 1(2) of Regulation (EC) No 367/2006 is
imports of the product concerned from exporting
hereby amended by inserting the following:
producers not individually mentioned in Article 1(2) of
Regulation (EC) No 367/2006, i.e. the duty specified as
applying to ‘all other companies’ in India, it is noted that
the actual modalities of the investigated schemes and
‘Vacmet India Limited, Anant Plaza,
11,0 A992’
IInd Floor, 4/117-2A, Civil Lines,
their countervailability have not changed with respect
Church Road, Agra-282002, Uttar
to the previous investigation. Thus there is no reason
Pradesh, India
to re-calculate the subsidy and duty rates of these
companies. Consequently, the rates of the duty applicable
to all companies other than the applicant remain
unchanged.
Article 2
(82) Interested
parties
were
informed
of
the
essential
facts
and
This Regulation shall enter into force on the day following its
considerations on the basis of which it was intended to
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, 28 February 2011.
For the Council
The President
FELLEGI T.

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