[Federal Register: July 8, 2003 (Volume 68, Number 130)]
[Notices]
[Page 40629-40637]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr08jy03-36]
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DEPARTMENT OF COMMERCE
International Trade Administration
[C-533-829]
Notice of Preliminary Affirmative Countervailing Duty
Determination: Prestressed Concrete Steel Wire Strand from India
AGENCY: Import Administration, International Trade Administration,
Department of Commerce.
ACTION: Notice of Preliminary Affirmative Countervailing Duty
Determination.
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EFFECTIVE DATE: July 8, 2003.
Preliminary Determination
The Department of Commerce (the Department) preliminarily
determines that countervailable subsidies are being provided to
producers and exporters of prestressed concrete steel wire strand (PC
strand or subject merchandise) from India. For information on the
estimated countervailing duty rates, please see the ``Suspension of
Liquidation'' section of this notice.
FOR FURTHER INFORMATION CONTACT: Robert Copyak at (202) 482-2209,
Alicia Kinsey at (202) 482-4793, or Cindy Robinson at (202) 482-3797,
Office of AD/CVD Enforcement VI, Group II, Import Administration,
International Trade Administration, U.S. Department of Commerce, Room
4012, 14th Street and Constitution Avenue, N.W., Washington, D.C.
20230.
SUPPLEMENTARY INFORMATION:
Petitioners
The petition in this investigation was filed by American Spring
Wire Corp., Insteel Wire Products Company, and Sumiden Wire Products
Corp. (collectively, the petitioners).
Case History
Since the publication of the notice of initiation in the Federal
Register (see Notice of Initiation of Countervailing Duty
Investigation: Prestressed Concrete Steel Wire Strand from India, 68 FR
9058 (February 27, 2003) (Initiation Notice)), the following events
have occurred.
On February 28, 2003, we issued our initial countervailing duty
questionnaire (initial questionnaire) to the Government of India
(GOI).\1\ On April 1, 2003, the GOI requested a one-month extension of
the April 7, 2003, deadline for submitting its response to the
``government'' portion of the initial questionnaire. We granted the GOI
an extension until April 21, 2003. On April 21, 2003, the GOI submitted
a partial questionnaire response and requested a second extension. The
GOI explained that it was having logistical difficulties in gathering
the requested information, which pertains to several state government
programs and various federal departments. See Memorandum to the File
from Alicia Kinsey, International Trade Analyst, concerning
Conversation with Government of India Official (April 24, 2003), which
is on
[[Page 40630]]
file in room B-099 of the Central Records Unit of the Main Commerce
Building (CRU). See also ``Use of Adverse Facts Available'' section,
below.
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\1\ In the questionnaire, we informed the GOI that it was the
government's responsibility to identify all Indian producers/
exporters that shipped subject merchandise to the United States
during the period of investigation and to forward a copy of the
``company'' portion of the initial questionnaire to all such
producers/exporters.
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On April 25, 2003, we informed the GOI that its April 21, 2003,
partial questionnaire response was incomplete and unusable for purposes
of calculating a countervailing duty rate, and we again extended the
deadline for submitting a complete questionnaire response until April
30, 2003. On April 28, 2003, the GOI submitted another partial
questionnaire response. However, the GOI did not file any more
submissions and thus did not meet the April 30, 2003, deadline for
filing a complete questionnaire response. On May 23, 2003, in a second
attempt to obtain the information we requested in the initial
questionnaire, we issued a supplemental questionnaire to the GOI. The
GOI's supplemental questionnaire response was due on June 6, 2003. The
GOI did not submit a response to the supplemental questionnaire. See
``Use of Adverse Facts Available'' section, below.
As of April 7, 2003, which was the original deadline for the
submission of responses to the initial questionnaire, we had not
received any responses from any Indian producers/exporters of the
subject merchandise. On April 14, 2003, we spoke with a law firm which
had entered an appearance in the investigation on behalf of Tata Inc.
(importer of subject merchandise) and Tata SSL Ltd. (producers/
exporters of subject merchandise) and inquired whether the law firm
intended to file a response on these companies' behalf. The law firm
informed us that it had not submitted any responses on behalf of Tata
Inc. and Tata SSL Ltd. because the companies were proceeding with the
investigation on a pro se basis. See Memorandum to the file from Robert
Copyak, Financial Analyst, concerning Conversation with Former Counsel
to Tata (April 24, 2003). On April 15, 2003, on the basis of their
recent change to pro se status, we granted Tata Inc. and Tata SSL Ltd.
an extension until April 30, 2003, to file a response to the initial
questionnaire.
On April 16, 2003, we spoke with a company official who stated that
the companies never received the initial questionnaire. See Memorandum
to the File from Alicia Kinsey, International Trade Analyst, concerning
April 16, 2003 Conversation with Tata Official (April 24, 2003). On
April 21, 2003, we spoke with the GOI official who had been
coordinating the GOI's involvement in the investigation. He explained
that the GOI had not distributed a copy of the initial questionnaire to
Tata Inc. and Tata SSL Ltd. Subsequently, the Department provided Tata
Inc. And Tata SSL Ltd. an electronic version of the questionnaire. See
Memorandum to the File from Alicia Kinsey, International Trade Analyst,
concerning Conversation with Government of India Official (April 24,
2003). See also ``Use of Adverse Facts Available'' section, below.
On April 29, 2003, Tata Inc. and Tata SSL Ltd. requested another
extension of the deadline for submitting responses to our initial
questionnaire. On April 30, 2003, we extended the deadline to May 7,
2003.On May 7, 2003, respondents' former counsel again entered an
appearance on behalf of Tata Inc. and Tata SSL Ltd.. On May 8, 2003,
Tata Iron and Steel Company Limited (Wire Division) (TISCO), which
recently acquired Tata SSL Ltd., submitted a response to the initial
questionnaire. Although the submission was filed one day after the
deadline, we accepted it as timely because the company informed us that
the delay was the fault of the courier. However, we returned the
submission to TISCO for correction and re-submission because it was
improperly filed and was not served on interested parties. See
Memorandum to the File from Robert Copyak and Alicia Kinsey, Case
Analsyts, through Melissa Skinner, Office Director, concerning
Acceptance and Request for Correction and Re-submission of the May 8,
2003, Questionnaire Response Submitted by TISCO (May 23, 2003). TISCO
corrected its May 8, 2003, submission and re-submitted it on May 28,
2003. On May 29, 2003, we issued a supplemental questionnaire to TISCO,
and TISCO submitted a timely response on June 12, 2003.
On June 16, 2003, petitioners submitted a letter urging the
Department to use facts available for purposes of the preliminary
determination. See ``Use of Adverse Facts Available'' section, below.
On June 23, 2003, respondent's counsel contacted a Department official
to inform the Department that respondent's counsel had received a tax
return requested in our initial and supplemental questionnaires to
TISCO; we informed respondents' counsel that if they were to submit the
tax return, it would be rejected by the Department as untimely filed.
See Memorandum to the File from Robert Copyak, Financial Analyst,
through Jim Terpstra, Program Manager regarding Conversation with
Garvey Schubert Barer, Counsel for Tata Iron and Steel Company Limited
(Wire Division) (June 23, 2003).
Extension of Time Limit for Preliminary Determination
On April 7, 2003, we published in the Federal Register an extension
of the due date for this preliminary determination from April 28, 2003,
to June 30, 2003. See Prestressed Concrete Steel Wire Strand from
India: Extension of Time Limit for Preliminary Determination in
Countervailing Duty Investigation, 68 FR 16783 (April 7, 2003).
Scope of the Investigation
The merchandise subject to this investigation is prestressed
concrete steel wire (PC strand), which is steel strand produced from
wire of non-stainless, non-galvanized steel, which is suitable for use
in prestressed concrete (both pre-tensioned and post-tensioned)
applications. The product definition encompasses covered and uncovered
strand and all types, grades, and diameters of PC strand.
The merchandise under this investigation is currently classifiable
under subheadings 7312.10.3010 and 7312.10.3012 of the Harmonized
Tariff Schedule of the United States (HTSUS). Although the HTSUS
subheadings are provided for convenience and customs purposes, the
written description of the merchandise under investigation is
dispositive.
In the scope section of the Initiation Notice for this
investigation, the Department encouraged all parties to submit comments
regarding product coverage by March 19, 2003. Petitioners filed
comments regarding product coverage on June 13, 2003. These comments
were submitted too late for consideration in this preliminary
determination. The Department will examine these comments for the Final
Determination.
Injury Test
Because India is a ``Subsidy Agreement Country'' within the meaning
of section 701(b) of the Tariff Act of 1930, as amended (the Act), the
International Trade Commission (ITC) is required to determine whether
imports of the subject merchandise from India materially injure or
threaten material injury to a U.S. industry. On March 21, 2003, the ITC
published its preliminary determination finding that there is a
reasonable indication that an industry in the United States is being
materially injured, or threatened with material injury, by reason of
imports of subject merchandise from India. See Prestressed Concrete
Steel Wire Strand from Brazil, India, Korea, Mexico, and Thailand, 68
FR 13952 (March 21, 2003).
[[Page 40631]]
Alignment With Final Antidumping Duty Determination
On June 26, 2003, petitioners submitted a letter requesting
alignment of the final determination in this investigation with the
final determination in the companion antidumping duty investigation.
Therefore, in accordance with section 705(a)(1) of the Act, we are
aligning the final determination in this investigation with the final
determination in the antidumping duty investigation of prestressed
concrete steel wire strand from India.
Period of Investigation
The period of investigation (POI) is April 1, 2001 through March
31, 2002. This period was alleged by petitioners to be the Indian
producers'/exporters' most recently completed fiscal year. See the
Initiation Notice and the February 20, 2003, Office of AD/CVD
Enforcement VI Initiation Checklist titled ``Initiation of
Countervailing Duty Investigation: Prestressed Concrete Steel Wire
Strand from India (C-533-829)''(Initiation Checklist), which is on file
in the CRU.
Use of Adverse Facts Available
We preliminarily determine that the GOI and TISCO's questionnaire
responses are incomplete and unusable, for the reasons set forth below.
Therefore, for this preliminary determination, we have calculated a
single countervailing duty rate that is applicable to all Indian
producers/exporters of subject merchandise. Accordingly, we also
preliminarily determine to base the calculation of this one rate on
facts available, pursuant to section 776(a) of the Act, and adverse
inferences, pursuant to section 776(b) of the Act (hereafter ``adverse
facts available'').
Despite our repeated requests and numerous extensions described
above, the GOI and the Indian exporters/producers of subject
merchandise have not provided the requested program information and
company-specific data necessary for calculating company-specific
countervailing duty rates.
We requested in the initial questionnaire that the GOI provide
basic information regarding the production of subject merchandise in
India and the administration of the federal and state programs that we
are investigating. As described above, although the GOI provided two
partial questionnaire responses, these submissions are incomplete and
unusable because they contain only a small portion of the information
we requested in the initial questionnaire. The GOI did not provide
complete answers and did not provide useable information. Moreover, the
GOI failed to answer specific questions regarding the nature of and
participants in India's PC strand industry and failed to answer
specific questions regarding the various federal and state programs
under investigation. The GOI also failed to distribute the ``company''
portion of the questionnaire to the producers/exporters of subject
merchandise.
In a supplemental questionnaire, we requested that the GOI provide
all of the information it had neglected to provide in its two partial
questionnaire responses. Despite this second opportunity to provide the
information requested in the initial questionnaire and the additional
time to provide it, the GOI did not file a response and therefore did
not provide the information necessary to conduct this countervailing
duty investigation.
Similarly, the questionnaire responses provided by TISCO are
incomplete and unusable. Despite several extensions, TISCO failed to
provide answers to specific questions regarding its use of various
federal and state programs under investigation. Most notably, however,
TISCO failed to provide the information requested regarding its
affiliated and parent companies. In addition, TISCO failed to submit
its tax returns, as requested in the Tax Programs Appendix of the
initial questionnaire. A copy of the company's tax return is necessary
for ascertaining whether the company claimed a tax exemption for export
profits under section 80 HHC of the India Tax Act. As mentioned in the
``Case History'' section, above, counsel for TISCO acquired a copy of
TISCO's tax return and offered to file it on the record; however, the
information, for which the Department had not granted an extension,
would have been filed nearly two weeks after the supplemental
questionnaire was due, and less than a week before this preliminary
determination was issued. TISCO had the opportunity to provide its tax
return in the initial questionnaire, for which two extensions were
granted, and in the supplemental questionnaire. Despite these numerous
opportunities, TISCO did not submit its tax return. The Department's
statutory obligations require a reasonable cut-off point for new
information to be submitted on the record and considered; therefore,
the Department did not solicit TISCO's tax return upon learning of its
availability. TISCO also failed to submit any information regarding
most of the state programs under investigation. TISCO also did not
submit adequate information regarding the Pre-shipment and Post-
shipment Export Financing program.
In a supplemental questionnaire, we requested the above-mentioned
information. Although TISCO provided some additional information, the
company did not submit its tax returns, did not provide any additional
information about the state programs, did not provide information about
their affiliate and parent companies, and did not supplement its
previously-submitted information regarding the Pre-shipment and Post-
shipment Export Financing program. Moreover, all of the information
submitted in both the initial and supplemental questionnaires was
generated from the Indian fiscal year 2002-2003, a fiscal year that was
not yet completed when the original questionnaire was issued.
Respondents did not consult with Department officials regarding their
definition of the period of investigation. The information provided by
the GOI covered the POI as identified in the questionnaire.
Section 776(a) of the Act requires the use of facts available when
an interested party withholds information that has been requested by
the Department, or when an interested party fails to provide the
information requested in a timely manner and in the form required. As
described above, the GOI and TISCO, as well as any other Indian
producers or exporters of the subject merchandise, have failed to
provide the information regarding the programs under investigation that
the Department expressly requested in the initial and supplemental
questionnaires. Because of TISCO's and the GOI's lack of cooperation,
the statute requires the use of facts otherwise available for purposes
of calculating the countervailing duty rates in this investigation.
Furthermore, section 776(b) of the Act provides that in selecting
from among the facts available, the Department may use an inference
that is adverse to the interests of a party if it determines that a
party has failed to cooperate to the best of its ability. The
Department finds that by not providing necessary information
specifically requested by the Department in this investigation, despite
numerous opportunities, the GOI and TISCO have failed to cooperate to
the best of their ability. As discussed above, the GOI failed to act to
the best of its ability by not distributing the questionnaires to
Indian producers/exporters of subject merchandise, not providing
necessary information specifically requested in the questionnaire, and
not responding to the Department's supplemental questionnaire. TISCO
also failed to act
[[Page 40632]]
to the best of its ability by not providing necessary information
specifically requested in the questionnaire and supplemental
questionnaire, despite numerous extensions, and by submitting
information using a different POI without consulting the Department.
Therefore, in selecting facts available, the Department determines that
an adverse inference is warranted.
Section 776(b) of the Act indicates that, when employing an adverse
inference, the Department may rely upon information derived from (1)
the petition; (2) a final determination in a countervailing duty or an
antidumping investigation; (3) any previous administrative review, new
shipper review, expedited antidumping review, section 753 review; or
(4) any other information placed on the record. See also 19 CFR
Sec. 351.308(c).
If the Department relies on this secondary information as facts
available, section 776(c) of the Act provides that the Department
shall, ``to the extent practicable,'' corroborate such information
using independent sources reasonably at its disposal. The Statement of
Administrative Action accompanying the URAA (SAA) further provides that
to corroborate secondary information means that the Department will
satisfy itself that the secondary information to be used has probative
value. See also, 19 CFR 351.308(d). Thus, in those instances in which
the Department determines to apply adverse facts available, in order to
satisfy itself that such information has probative value, the
Department will examine, to the extent practicable, the reliability and
relevance of the information used. However, unlike other types of
information, such as publicly available data on the national inflation
rate of a given country or national average interest rates, there are
typically no independent sources for data on company-specific benefits
resulting from countervailable subsidy programs. The only source for
such information normally is administrative determinations. With
respect to the relevance aspect of corroboration, the Department will
consider information reasonably at its disposal as to whether there are
circumstances that would render benefit data not relevant. See Cotton
Shop Towels From Pakistan: Final Results of Countervailing Duty
Administrative Review, 66 FR 42514 (August 13, 2001). However, the fact
that corroboration may not be practicable in a given case does not
prevent the Department from applying an adverse inference as
appropriate, and does not prevent the Department from using the
secondary information. See 19 CFR 351.308(d). The SAA accompanying the
URAA clarifies that information from the petition is ``secondary
information.'' See Statement of Administrative Action, accompanying
H.R. 5110 (H. Doc. No. 103-316) (1994) at 870.
Because the respondents failed to act to the best of their ability,
as discussed above, for each program examined, unless the record
information made it clear that respondents could not have received
benefits from the program, we made the adverse inference that the
respondent benefitted from the program, consistent with our practice.
See, e.g., Certain Cold-Rolled Carbon Steel Flat Products From Korea;
Final Affirmative CVD Determination, 67 FR 62102 (October 3, 2002).
Therefore, as adverse facts available, we preliminarily determine to
use (where possible) the highest company-specific program rates from
the most recently-completed investigation pertaining to exports of an
Indian steel product see Final Affirmative Countervailing Duty
Determination: Certain Hot-Rolled Carbon Steel Flat Products From
India, 66 FR 49635 (September 28, 2001) (Hot-Rolled Steel From India)
and Issues and Decision Memorandum: Final Results of the Countervailing
Duty Investigation: Certain Hot-Rolled Carbon Steel Flat Products From
India, which is on file in the CRU or available online at http://www.ia.ita.doc.gov/frn/summary/india/01-24404-1.txt
(Hot-Rolled Steel
From India Decision Memo). Because some of the programs under
investigation were not investigated in Hot-Rolled Steel From India, 66
FR 49635, we preliminarily determine, consistent with our practice, to
use (where possible) the highest company-specific program rates from
another recently-completed Indian investigation. See Notice of Final
Affirmative Countervailing Duty Determination: Polyethylene
Terephthalate Film, Sheet, and Strip From India, 67 FR 34905 (May 16,
2002) (PET Film From India) and Issues and Decision Memorandum: Final
Countervailing Duty Determination: Polyethylene Terephthalate Film,
Sheet, and Strip (PET Film) From India, which is on file in the CRU or
available online at http://ia.ita.doc.gov/frn/summary/india/02-12294-1.txt
(PET Film From India Decision Memo). See also Final Affirmative
Countervailing Duty Determination: Stainless Steel Sheet and Strip in
Coils From the Republic of Korea, 64 FR 30636 (June 8, 1999) (Sheet and
Strip from Korea).
To corroborate the secondary information that Indian producers/
exporters of subject merchandise are eligible to use and may have
benefitted from these programs, we reviewed the federal and state
industrial policy and tax bulletins that were submitted on the record
by petitioners (in the petition) and by the GOI and the Indian
producers/exporters in their questionnaire responses. We also reviewed
official government correspondence and records kept by administering
authorities. We note that many of these documents were examined at the
respective verifications. See Hot-Rolled Steel From India, 66 FR 49635,
and PET Film From India, 67 FR 34905. Based on our review of these
documents, these rates are neither unduly harsh nor punitive, and
because they have been corroborated, continue to have probative value.
With respect to two of the programs we have previously examined,
Tax Deductions under Section 80HHC of the India Tax Act and the State
of Maharastra Capital Incentive Scheme, we were unable to use company-
specific program rates from Hot-Rolled Steel From India and PET Film
From India because the Department determined that the programs were not
used during the POIs of those cases. As adverse facts available for
these two programs, we preliminarily determine to use program rates of
2.00 percent ad valorem, which is the de minimis rate for developing
countries. See Section 703(b)(4)(B). To corroborate our adverse
inference that Indian producers/exporters of subject merchandise are
eligible to use and may have benefitted from these programs, we
reviewed the federal and state industrial policy and tax bulletins that
were submitted on the record by petitioners (in the petition) and by
GOI and the Indian producers/exporters in their questionnaire
responses. We also reviewed official government correspondence and
records kept by administering authorities. We note that many of these
documents were examined at the respective verifications. See Hot-Rolled
Steel From India, 66 FR 49635, and PET Film From India, 67 FR 34905.
Based on our review of these documents, these rates are neither unduly
harsh nor punitive, and because they have been corroborated, continue
to have probative value.
For each program that we have not examined in previous
investigations or administrative reviews, we preliminarily determine to
use an adverse facts available program rate of 2.00 percent ad valorem.
See ``Programs Previously Not Examined'' section, below. In selecting
this rate, we relied on the information put forth by petitioners. In a
letter to the Secretary of Commerce dated June 16, 2003, petitioners
argue for the application of
[[Page 40633]]
the de minimis rate for developing countries for each program in which
the respondents failed to provide the necessary information to
calculate a countervailing duty rate. See petitioners' June 16, 2003
letter; see also Section 703(b)(4)(B). To ensure that respondents are
provided an incentive to respond in the future, and because ``in
employing adverse inferences, one factor [the Department] will consider
is the extent to which a party may benefit from its own lack of
cooperation,'' we have preliminarily determined it was reasonable to
apply the 2.00 percent rate. (SAA at 870.) Because we have no
information on these programs, it was not practicable in this case to
corroborate the 2.00 percent rate with anything other than the general
information (i.e., various federal and state industrial policy
bulletins) used for the allegations in the petition. See Sheet and
Strip Korea, 64 FR 30636. Based on the record of this case, we regard
the petition a practicable source for corroboration, because
information in the petition is reliable and relevant, and there is no
record information showing otherwise. See 19 CFR 351.308(c)(2)(d).
Therefore, we conclude that because TISCO and the GOI failed to
cooperate to the best of their ability, we are making an adverse
inference that a program rate of 2.00 percent ad valorem might reflect
the level of benefit they are receiving. To corroborate our adverse
inference that Indian producers/exporters of subject merchandise are
eligible to use and may have benefitted from these programs, we
reviewed the federal and state industrial policy and tax bulletins that
were submitted on the record by petitioners in the petitions. Based on
this review, these rates are neither unduly harsh nor punitive, and
because they have been corroborated, continue to have probative value.
Programs Previously Determined To Be Countervailable
As explained in the Initiation Notice and in the Initiation
Checklist, this investigation includes several programs that were
determined to be countervailable in previous investigations and
administrative reviews. No new information or evidence of changed
circumstances has been submitted in this investigation to warrant
reconsideration of those determinations. Therefore, in accordance with
section 771(5A)(B) of the Act, we continue to determine that the
following programs are countervailable. Full descriptions of each
program are provided in the Initiation Checklist. See Hot-Rolled Steel
From India, 66 FR 49635, and Pet Film From India, 67 FR 34905, for the
Department's determinations of countervailaibility for each of these
programs.
A. Government of India Programs
1. Pre-shipment and Post-shipment Export Financing
The Reserve Bank of India (RBI), through commercial banks, provides
short-term pre-shipment financing, or ``packing credits,'' to
exporters. Post-shipment export financing consists of loans in the form
of discounted trade bills or advances by commercial banks.
The Department has previously determined that this export financing
is countervailable to the extent that the interest rates are set by the
GOI and are lower than the rates exporters would have paid on
comparable commercial loans. See, Hot-Rolled Steel From India, 66 FR
49635, and Pet Film From India, 67 FR 34905, and Final Affirmative
Countervailing Duty Determination: Certain Cut-to-Length Carbon-Quality
Steel Plate From India, 64 FR 73137 (December 29, 1999) (CTL Plate From
India). Specifically, the Department determined that the GOI's issuance
of financing at preferential rates constituted a financial contribution
pursuant to section 771(5)(D)(i) of the Act. See the ``Pre-Shipment and
Post-Shipment Export Financing'' section of the PET Film From India
Decision Memo. The Department further determined that the interest
savings under this program conferred a benefit pursuant to section
771(5)(E)(ii) of the Act. Id. In addition, the Department determined
this program, which is contingent upon exports, to be specific within
the meaning of section 771(5A)(B) of the Act. Id.
As adverse facts available for pre-shipment export financing, we
preliminary determine to use a rate of 1.32 percent ad valorem, which
is the highest company-specific program rate calculated in Hot-Rolled
Steel From India, 66 FR 49635. As adverse facts available for post-
shipment export financing, we preliminary determine to use a rate of
0.74 percent ad valorem, which is the highest company-specific program
rate calculated in Hot-Rolled Steel From India, 66 FR 49635.
2. Duty Entitlement Passbook Scheme (DEPS)
India's DEPS was enacted on April 1, 1997, as a successor to the
Passbook Scheme (PBS). As with PBS, the DEPS enables exporting
companies to earn import duty exemptions in the form of passbook
credits rather than cash. All exporters are eligible to earn DEPS
credits on a post-export basis, provided that the exported product is
listed in the GOI's Standard Input/Output Norms (SIONs). Post-export
DEPS credits can be used for any subsequent imports, regardless of
whether they are consumed in the production of an export product. Post-
export DEPS credits are valid for 12 months and are transferable.
Exporters were eligible to earn credits equal to certain percent of the
f.o.b. value of their export shipments.
The Department has previously determined that the DEPS is
countervailable. See, Hot-Rolled Steel From India, 66 FR 49635 and Pet
Film From India, 67 FR 34905. In PET Film From India, the Department
determined that (1) under the DEPS, a financial contribution, as
defined under section 771(5)(D)(ii) of the Act, is provided because the
GOI provides credits for the future payment of import duties; (2) since
the GOI does not have in place and does not apply a system to confirm
which inputs, and in what amounts, are consumed in the production of
the exported products that is reasonable and effective for the purposes
intended, under section 351.519(a)(4) of the Department's regulations
and section 771(5)(E) of the Act, the entire amount of import duty
exemption earned during the POI constitutes a benefit; and (3) this
program can only be used by exporters and, therefore, is specific under
section 771(5A)(B) of the Act. See the ``DEPS'' section of the PET Film
From India Decision Memo, on file in the CRU.
As adverse facts available for the DEPS, we preliminary determine
to use a rate of 13.98 percent ad valorem, which is the highest
company-specific program rate calculated in Hot-Rolled Steel From
India, 66 FR 49635.
3. Export Promotion Capital Goods Scheme (EPCGS)
The EPCGS provides for a reduction or exemption of customs duties
and an exemption from excise taxes on imports of capital goods. Under
this program, producers may import capital equipment at reduced rates
of duty by undertaking to earn convertible foreign exchange equal to
four to five times the value of the capital goods within a period of
eight years. For failure to meet the export obligation, a company is
subject to payment of all or part of the duty reduction, depending on
the extent of the export shortfall, plus penalty interest.
In previous investigations, we determined that producers/exporters
benefit from the waiver of import duty on imports of capital equipment.
A
[[Page 40634]]
second type of benefit conferred under this program involves the import
duty reductions that producers/exporters received on the imports of
capital equipment for which producers/exporters have not yet met their
export requirements. For those capital equipment imports, producers/
exporters have unpaid duties that will have to be paid to the GOI if
the export requirements are not met. When a company has an outstanding
liability and the repayment of that liability is contingent upon
subsequent events, our practice is to treat any balance on that unpaid
liability as an interest-free loan. See 19 CFR Sec. 351.505(d)(1). See
Hot-Rolled Steel From India, 66 FR 49635, and Pet Film From India, 67
FR 34905, and CTL Plate From India, 64 FR 73137.
In PET Film From India, the Department determined that (1) the
receipt of benefits under this program is contingent upon export
performance in accordance with section 771(5A)(B) of the Act; (2) the
GOI provided a financial contribution under section 771(5)(D)(ii) of
the Act in the two ways described above; and (3) the program provides
benefits under section 771(5)(E) of the Act. See the ``Export Promotion
of Capital Goods Scheme (EPCGS)'' section of the Pet Film From India
Decision Memo.
As adverse facts available for the EPCGS, we preliminary determine
to use a rate of 16.63 percent ad valorem, which is the highest
company-specific program rate calculated in Hot-Rolled Steel From
India, 66 FR 49635.
4. Loans From the Steel Development Fund (SDF)
Under the SDF program, companies that contributed to the fund are
eligible to take out long-term loans at advantageous rates. In order to
create the SDF, the GOI, acting through the Joint Planning Commission,
mandated steel p price increases which were earmarked for the SDF. In
previous investigations, the Department determined that this program is
countervailable. Under section 771(5)(B) of the Act, a subsidy can be
found whenever the government makes a financial contribution, when it
provides a payment to a funding mechanism to provide a financial
contribution, or when it entrusts or directs a private entity to make a
financial contribution. Therefore, in Hot-Rolled Steel From India, we
found that SDF loans constituted a financial contribution and conferred
a benefit within the meaning of section 771(5)(D(i) and (E)(ii) of the
Act, respectively. See ``Comment 1: Steel Development Loans and Loan
Forgiveness''of the Hot-Rolled Steel From India Decision Memo. Because
eligibility for loans from the SDF is limited to steel companies, we
also determined that loans under this program are specific within the
meaning of 771(5A)(D)(i) of the Act. See Hot-Rolled Steel From India,
66 FR 49635, and the ``Comment 1: Steel Development Loans and Loan
Forgiveness'' section in the Hot-Rolled Steel From India Decision Memo.
As adverse facts available for the SDF Loan program, we preliminary
determine to use a rate of 0.99 percent ad valorem, which is the
highest company-specific program rate calculated in Hot-Rolled Steel
From India, 66 FR 49635.
5. Exemption of Export Credit From Interest Taxes
Under the Interest Tax Act of 1974, a tax is levied on the
chargeable interest accruing to a credit institution in a given year.
Under Section 28 of the Income Tax Act, the GOI may exempt any credit
institution or class of credit institutions, or the interest on any
category of loan or advances from the levy of the interest tax.
Pursuant to this section of the Income Tax Act, the GOI has exempted
working capital loans taken from banks for supporting exports from the
interest tax. Loans obtained by producers/exporters of subject
merchandise from banks under the pre- and post-shipment export
financing program are covered by this exemption. All producers/
exporters of subject merchandise are eligible to use this program.
In Hot-Rolled Steel From India, we determined that this program is
contingent upon export performance and, therefore, is specific in
accordance with section 771(5A)(B) of the Act. See ``Comment 13:
Exemption of Export Credit From Interest Tax'' of Hot-Rolled Steel From
India Decision Memo. We have also determined that the GOI provided a
financial contribution under section 771(5)(D)(ii) of the Act and that
the program provides a benefit under section 771(5)(E) of the Act. See
Hot-Rolled Steel From India, 66 FR 49635.
As adverse facts available for the Exemption of Export Credit From
Interest Taxes program, we preliminary determine to use a rate of 0.08
percent ad valorem, which is the highest company-specific program rate
calculated in Hot-Rolled Steel From India, 66 FR 49635.
6. Advance Licenses
Under India's Duty Exemption Scheme, exporters may also import
inputs duty-free through the use of import licenses. Using advance
licenses, companies are able to import inputs ``required for the
manufacture of goods'' without paying India's basic customs duty.
In Hot-Rolled Steel From India, the Department determined that the
use of advance licenses was countervailable. See the ``Advance
Licenses'' section of the Hot-Rolled Steel From India Decision Memo.
The program is contingent upon export performance and, therefore, is
specific in accordance with section 771(5A)(B) of the Act. Under the
program, the GOI provides a financial contribution under section
771(5)(D)(ii) of the Act, and the program provides a benefit under
section 771(5)(E) of the Act. See Hot-Rolled Steel From India, 66 FR
49635.
As adverse facts available for the Advance Licenses program, we
preliminary determine to use a rate of 0.24 percent ad valorem, which
is the highest company-specific program rate calculated in Hot-Rolled
Steel From India, 66 FR 49635.
7. Income Tax Exemption Scheme (Section 80 HHC)
In Certain Iron-Metal Castings From India: Final Results of
Countervailing Duty Administrative Review (Iron-Metal Castings from
India), 65 FR 31515 (May 18, 2000), the Department determined that
deductions of profit derived from exports under section 80HHC of
India's Income Tax Act are countervailable. The program is contingent
upon export performance and, therefore, is specific in accordance with
section 771(5A)(B) of the Act. Under the program, the GOI provides a
financial contribution under section 771(5)(D)(ii) of the Act, and the
program provides a benefit under section 771(5)(E) of the Act.
Although in Hot-Rolled Steel From India, 66 FR 49635, and PET Film
From India, 67 FR 34905, we determined that the producers and exporters
of subject merchandise did not use this program, we initiated an
investigation of this program because the Department has not made a
determination that the program has been terminated.
As adverse facts available for this program, we preliminarily
determine to use a rate of 2.00 ad valorem, which is the de minimis
rate for developing countries.
8. Loan Guarantees From the GOI
The GOI provides loan guarantees on a case-by-case basis. Loan
guarantees are normally extended to ``Public Sector Companies'' in
particular industrial sectors. In Hot-Rolled Steel From India, we
determined, in accordance with section 771(5)(D)(i) of the Act, that
GOI loan guarantees conferred
[[Page 40635]]
countervailable subsidies because they result in a financial
contribution by the government in the form of revenue forgone and, in
accordance with section 771(5)(E) of the Act, provide a benefit to the
recipient in the amount of the interest tax savings. Moreover, we
determined that the receipt of the loan guarantees were limited to
certain companies selected by the GOI on an ad hoc basis and, thus, we
found the program to be specific under section 771(5A)(D)(iii)(II) of
the Act.
As adverse facts available for the GOI Loan Guarantee program, we
preliminary determine to use a rate of 0.19 percent ad valorem, which
is the highest company-specific program rate calculated in Hot-Rolled
Steel From India, 66 FR 49635.
B. State of Maharastra (SOM) Programs
1. Sales Tax Incentives
Petitioners allege that incentives offered by the SOM under the
Industrial Policy of Maharashtra 1993 provide either exemption or
deferral of state sales taxes. Under this program, companies are
exempted from paying state sales taxes on purchases and collecting
sales taxes on sales; or, as an alternative, recipients are allowed to
defer submitting sales taxes collected on sales to the SOM for ten to
twelve years. After the deferral period expires, the companies are
required to submit the deferred sales taxes to the SOM in equal
installments over five to six years. Petitioners claim that producers
of subject merchandise received countervailable benefits under this
program. In addition, petitioners argue that although this program
appears to be discontinued pursuant to the Industrial Policy of
Maharashtra 2001, respondents nonetheless may have benefitted during
the POI from either the deferral or the exemption of the sales tax.
In PET Film from India, the Department determined the program to be
specific within the meaning of section 771(5A)(D)(iv) of the Act
because the benefits are limited to industries located within
designated geographical areas. The Department also determined that the
SOM provided a financial contribution under section 771(5)(D)(i) of the
Act in the form of uncollected interest and that the program conferred
benefits under section 771(5)(E) of the Act. See the ``Sales Tax
Incentives'' section of the PET Film from India Decision Memo.
As adverse facts available for this SOM program, we preliminary
determine to use a rate of 2.39 percent ad valorem, which is the
highest company-specific program rate calculated in PET Film From
India, 67 FR 34905.
2. Capital Incentive Scheme
Petitioners allege that companies operating in specific areas of
the SOM are eligible to receive capital incentives in the form of
either cash grants (of up to 3,000,000 rupees) or sales tax incentives.
Petitioners allege that producers of subject merchandise received
countervailable benefits under this program.
In PET Film From India , the Department determined that this
program is countervailable. We determined that the program is specific
under section 771(5A)(D)(iv) of the Act because it is limited to
industries located in designated geographical areas within the SOM. We
further determined that the program provides a financial contribution
under section 771(5)(D)(i) of the Act in the form of a direct transfer
of funds from the SOM and conferred a benefit under 771(5)(E) of the
Act. Although we determined that the producers and exporters of PET
film did not use this program, we initiated an investigation of this
program because the Department has not made a determination that the
program has been terminated.
As adverse facts available for this SOM program, we preliminary
determine to use a rate of 2.00 percent ad valorem, which is the de
minimis rate applicable for developing countries.
3. Electricity Duty Exemption Scheme
This program provides an exemption from the payment of tax on
electricity charges for manufacturers located in specific regions of
Maharashtra. In PET Film From India, we determined that this program is
countervailable because (1) it is specific within the meaning of
section 771(5A)(D)(iv) of the Act; (2) the tax exemption provided
through the program constitutes a financial contribution with the
meaning of section 771(5)(D)(ii) of the Act; and (3) pursuant to
section 771(5)(E) of the Act, the benefit consists of the amount of the
tax exempted.
As adverse facts available for this SOM program, we preliminary
determine to use a rate of 0.36 percent ad valorem, which is the
highest company-specific program rate calculated in PET Film From
India, 67 FR 34905.
Programs Not Previously Examined
As explained in the Initiation Notice and in the Initiation
Checklist, this investigation includes several programs that have not
been examined in prior investigations and administrative reviews.
Because the GOI and TISCO did not provide the information necessary to
conduct our investigation of these programs, we are making an adverse
inference that each program is countervailable. Summaries of
petitioners' allegations with regard to each program are provided in
the Initiation Checklist.
A. Programs in the State of Maharashtra
1. Octroi Refund Scheme
Petitioners alleged that, under the Octroi Refund Scheme,
industrial establishments that make capital investments in specific
regions of Maharashtra are entitled to the refund of octroi duty, a tax
levied by local authorities on goods that enter a town or district, and
possibly to the refund of other duties. As adverse facts available for
the State of Maharastra Octoi Refund Scheme, we preliminary determine
to use a rate of 2.00 percent ad valorem, which is the de minimis rate
applicable for developing countries.
2. Exemption of Sales and Purchase Taxes for Certain Investments
Related to Automobiles or Automobile Components
Petitioners alleged that, under this program, automobile investment
projects over Rs. 15 billion in Category A districts are eligible to
receive tax incentives. As adverse facts available for this State of
Maharastra program, we preliminary determine to use a rate of 2.00
percent ad valorem, which is the de minimis rate applicable for
developing countries.
B. Program in the State of Bihar
1. Sales Tax Incentives
Petitioners argued that the State of Bihar operates its sales tax
scheme in a manner ``substantially identical'' to the Maharashtra sales
tax incentive scheme that the Department countervailed in PET Film From
India. They alleged that, under the Industrial Policy of Bihar 1995,
the government granted tax incentives to companies that invested in
``backward areas'' within Bihar. In addition, petitioners pointed out
that the State of Bihar expands its sales tax scheme by expanding the
eligibility criteria to include new or existing industrial units
undertaking expansion, modernization, or diversification through an
investment of more than Rs. 500 crores (equivalent to Rs.
5,000,000,000, as Rs. 1 crore = 10,000,000 rupees). They alleged, that,
under this sales tax scheme, ``new industrial units'' are permitted to
either ``set off'' or exempt sales taxes paid on
[[Page 40636]]
the purchase of raw materials within the state and either defer or
exempt sales taxes on the sale of finished goods.
As adverse facts available for the State of Bihar sales tax
incentive program, we preliminary determine to use a rate of 2.00
percent ad valorem, which is the de minimis rate applicable for
developing countries.
C. Programs in the State of Jharkhand
1. Sales Tax Incentives
Petitioners alleged that, under this program, ``existing industrial
units'' as well as ``new industrial units'' are eligible to ``set off''
the Jharkhand sales tax paid on purchases of raw materials against the
amount of sales tax payable to Jharkhand on the sale of finished
products. As adverse facts available for the State of Jharkhand (SOJ)
sales tax incentive program, we preliminary determine to use a rate of
2.00 percent ad valorem, which is the de minimis rate applicable for
developing countries.
2. Captive Electricity Generative Plant Subsidy
Petitioners alleged that, under the Jharkhand Industrial Policy
2001, the SOJ provides a grant to ``new industrial units'' in certain
industries that invest in a captive electricity generating plant within
``backward areas'' of the state. As adverse facts available for the SOJ
program, we preliminary determine to use a rate of 2.00 percent ad
valorem, which is de minimis rate applicable for developing countries.
3. Interest Subsidy
Petitioners alleged that, under the Jharkhand Industrial Policy
2001, the SOJ provides an interest subsidy to eligible ``new industrial
units'' that invest in ``backward areas'' within the state. Annexures I
and III of the Jharkhand Industrial Policy 2001 identify ``backward
areas'' and ineligible industries, respectively. As adverse facts
available for this SOJ program, we preliminary determine to use a rate
of 2.00 percent ad valorem, which is de minimis rate applicable for
developing countries.
4. Stamp Duty and Registration
Petitioners alleged that, under the Jharkhand Industrial Policy
2001, the SOJ grants an exemption from the payment of 50 percent of the
stamp duty and registration fee required for the purpose of registering
documents with the state relating to the purchase of land and buildings
for establishing a ``new industrial unit'' within certain ``backward
areas'' of the state. As adverse facts available for the SOJ program,
we preliminary determine to use a rate of 2.00 percent ad valorem,
which is the de minimis rate applicable for developing countries.
5. Pollution Control Equipment Subsidy
Petitioners alleged that, under the Jharkhand Industrial Policy
2001, the SOJ provides a capital investment subsidy in the form of a
grant for installation of pollution control and monitoring equipment to
eligible new and existing industrial units in ``backward areas'' of the
state. As adverse facts available for the SOJ program, we preliminary
determine to use a rate of 2.00 percent ad valorem, which is the de
minimis rate applicable for developing countries.
6. Mega Units
Petitioners alleged that, under the Jharkhand Industrial Policy
2001, the SOJ formulates special tax incentives and tax deferrals for
new projects with an investment of more than Rs. 500,000,000 (``mega
units'') on a case-by-case basis. As adverse facts available for this
SOJ program, we preliminary determine to use a rate of 2.00 percent ad
valorem, which is the de minimis rate applicable for developing
countries.
7. Captive Electricity Tax Exemptions
Petitioners allege that the SOJ seeks to encourage the private
sector to establish captive power generation plants. Under the
Jharkhand Industrial Policy 2001, such captive power generation and
purchase shall be exempted from electricity duty for a period of ten
years from the date of commercial production. As adverse facts
available for this SOJ program, we preliminary determine to use a rate
of 2.00 percent ad valorem, which is the de minimis rate applicable for
developing countries.
D. Program in the State of Gujarat
1. Sales Tax Incentives
Petitioners argue that, pursuant to the 1995 Industrial Policy of
Gujarat, the government granted sales tax incentives to eligible
investments located in specific areas in Gujarat. Only ``banned
industries'' and operations in ``banned areas'' were ineligible.
Petitioners allege that eligible units were entitled to purchase raw
materials, consumable stores, packing materials and processing
materials required for production free of charge. They allege that, in
addition, other available benefits included exemptions or deferment
from sales tax on the sales of goods, intermediate products by-
products, scrap, and waste as well as exemptions or deferment from
turnover tax and the Central Sales Tax. Petitioners allege that, with
the 2000 Industrial Policy, the State of Gujarat extended the
availability of these sales tax incentives, allowing companies to
continue benefitting after 2000.
As adverse facts available for the State of Gujarat's sales tax
incentive program, we preliminary determine to use a rate of 2.00
percent ad valorem, which is the de minimis rate applicable for
developing countries.
Suspension of Liquidation
In accordance with 703(b) of the Act, we have calculated the
following countervailing duty rate for all Indian producers/exporters
of subject merchandise.
------------------------------------------------------------------------
Producer/Exporter Net subsidy rate
------------------------------------------------------------------------
All producers/exporters................... 62.92% ad valorem
------------------------------------------------------------------------
In accordance with section 703(d) of the Act, we are directing the
U.S. Bureau of Customs and Border Protection to suspend liquidation of
all entries of the subject merchandise From India, which are entered or
withdrawn from warehouse, for consumption on or after the date of the
publication of this notice in the Federal Register, and to require a
cash deposit or the posting of a bond for such entries of the
merchandise in the amount indicated above. This suspension will remain
in effect until further notice.
ITC Notification
In accordance with section 703(f) of the Act, we will notify the
ITC of our determination. In addition, we are making available to the
ITC all non-privileged and nonproprietary information relating to this
investigation. We will allow the ITC access to all privileged and
business proprietary information in our files, provided the ITC
confirms that it will not disclose such information, either publicly or
under an administrative protective order, without the written consent
of the Assistant Secretary for Import Administration.
In accordance with section 705(b)(2) of the Act, if our final
determination is affirmative, the ITC will make its final determination
within 45 days after the Department makes its final determination.
Public Comment
In accordance with 19 CFR 351.310, we will hold a public hearing,
if requested, to afford interested parties an opportunity to comment on
this preliminary determination. Any requested hearing will be
tentatively scheduled to be held 57 days from the date of publication
of the preliminary
[[Page 40637]]
determination at the U.S. Department of Commerce, 14th Street and
Constitution Avenue, N.W., Washington, D.C. 20230. Individuals who wish
to request a hearing must submit a written request within 30 days of
the publication of this notice in the Federal Register to the Assistant
Secretary for Import Administration, U.S. Department of Commerce, Room
1870, 14th Street and Constitution Avenue, N.W., Washington, D.C.
20230. Parties should confirm by telephone the time, date, and place of
the hearing 48 hours before the scheduled time. Requests for a public
hearing should contain: (1) The party's name, address, and telephone
number; (2) the number of participants; and, (3) to the extent
practicable, an identification of the arguments to be raised at the
hearing.
In addition, six copies of the business proprietary version and six
copies of the non-proprietary version of the case briefs must be
submitted to the Assistant Secretary no later than 50 days from the
date of publication of the preliminary determination. As part of the
case brief, parties are encouraged to provide a summary of the
arguments not to exceed five pages and a table of statutes,
regulations, and cases cited. Six copies of the business proprietary
version and six copies of the non-proprietary version of the rebuttal
briefs must be submitted to the Assistant Secretary no later than 5
days from the date of filing of the case briefs. An interested party
may make an affirmative oral presentation only on arguments included in
that party's case or rebuttal briefs. Written arguments should be
submitted in accordance with 19 CFR 351.309 and will be considered if
received within the time limits specified above.
This determination is published pursuant to sections 703(f) and
777(i) of the Act.
Dated: June 30, 2003.
Joseph A. Spetrini,
Acting Assistant Secretary for Import Administration.
[FR Doc. 03-17216 Filed 7-7-03; 8:45 am]