[Federal Register Volume 63, Number 133 (Monday, July 13, 1998)]
[Notices]
[Pages 37534-37539]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 98-18598]
-----------------------------------------------------------------------
DEPARTMENT OF COMMERCE
International Trade Administration
[C-533-063]
Certain Iron-Metal Castings from India: Preliminary Results of
Countervailing Duty Administrative Review
AGENCY: Import Administration, International Trade Administration,
Department of Commerce.
ACTION: Notice of Preliminary Results of Countervailing Duty
Administrative Review.
-----------------------------------------------------------------------
SUMMARY: The Department of Commerce is conducting an administrative
review of the countervailing duty order on certain iron-metal castings
from India. The period covered by this administrative review is January
1, 1996 through December 31, 1996. For information on the net subsidy
for each reviewed company, as well as for all non-reviewed companies,
please see the Preliminary Results of Review section of this notice. If
the final results remain the same as these preliminary results of
administrative review, we will instruct the U.S. Customs Service to
assess countervailing duties as detailed in the Preliminary Results of
Review section of this notice. Interested parties are invited to
comment on these preliminary results. (See Public Comment section of
this notice.)
EFFECTIVE DATE: July 13, 1998.
FOR FURTHER INFORMATION CONTACT: Kristen Johnson or Christopher Cassel,
Office of CVD/AD Enforcement VI, Import Administration, International
Trade Administration, U.S. Department of Commerce, 14th Street and
Constitution Avenue, NW, Washington, D.C. 20230; telephone: (202) 482-
2786.
SUPPLEMENTARY INFORMATION:
Background
On October 16, 1980, the Department of Commerce (``the
Department'') published in the Federal Register (45 FR 50739) the
countervailing duty order on certain iron-metal castings from India. On
October 2, 1997, the Department published a notice of ``Opportunity to
Request Administrative Review'' (62 FR 51628) of this countervailing
duty order. We received timely requests for review, and we initiated a
review covering the period January 1, 1996 through December 31, 1996,
on November 26, 1997 (62 FR 63069).
In accordance with 19 C.F.R. 351.213(b), this review covers only
those producers or exporters of the subject merchandise for which a
review was specifically requested. The producers/exporters of the
subject merchandise for which the review was requested are:
Calcutta Ferrous Ltd.,
Carnation Industries Ltd.,
Commex Corporation,
Crescent Foundry Co. Pvt. Ltd.,
Delta Enterprises,
Dinesh Brothers (P) Ltd.,
Kajaria Iron Castings Pvt. Ltd.,
Kejriwal Iron & Steel Works Pvt. Ltd.,
Metflow Corporation,
Nandikeshwari Iron Foundry Pvt. Ltd.,
Orissa Metal Industries,
Overseas Iron Foundry,
R.B. Agarwalla & Company,
R.B. Agarwalla & Co. Pvt. Ltd.,
RSI Limited,
Seramapore Industries Pvt. Ltd.,
Shree Rama Enterprise,
Shree Uma Foundries,
Siko Exports,
SSL Exports,
Super Iron Foundry,
Uma Iron & Steel, and
Victory Castings Ltd.
Delta Enterprises, Metflow Corporation, Orissa Metal Industries, R.B.
Agarwalla & Co. Pvt. Ltd., Shree Uma Foundries, Siko Exports, and SSL
Exports did not export the subject merchandise to the United States
during the period of review (``POR''). Therefore, these companies have
not been assigned an individual company rate for this administrative
review. This review covers 19 programs.
On November 14, 1997, the Department issued a questionnaire to the
Government of India (``GOI'') and producers/exporters of the subject
merchandise. The Department received questionnaire responses from the
GOI and the producers/exporters of the subject merchandise on January
13, 1998. The Department issued supplemental questionnaires to the GOI
and certain producers/exporters of the subject merchandise on March 16
and 25, 1998, April 30, 1998, and May 14, 1998. The supplemental
questionnaire responses were received on April 9, 1998, and May 11, 15,
and 21, 1998.
Applicable Statute and Regulations
Unless otherwise indicated, all citations to the statute are
references to the provisions of the Tariff Act of 1930, as amended by
the Uruguay Round Agreements Act (``URAA'') effective January 1, 1995
(``the Act''). The Department is conducting this administrative review
in accordance with section 751(a) of the Act. All citations to the
Department's regulations reference 19 C.F.R. Part 351, 62 FR 27296 (May
19, 1997), unless otherwise indicated.
Scope of the Review
Imports covered by this administrative review are shipments of
Indian manhole covers and frames, clean-out covers and frames, and
catch basin grates and frames. These articles are commonly called
municipal or public works castings and are used for access or drainage
for public utility, water, and sanitary systems. During the review
period, such merchandise was classifiable under the Harmonized Tariff
Schedule (``HTS'') item numbers 7325.10.0010 and 7325.10.0050. The HTS
item numbers are provided for
[[Page 37535]]
convenience and Customs purposes. The written description remains
dispositive.
Verification
As provided in section 782(i) of the Act, we verified information
submitted by the Government of India and certain producers/exporters of
the subject merchandise. We followed standard verification procedures,
including meeting with government and company officials and conducting
an examination of all relevant accounting and financial records and
other original source documents. Our verification results are outlined
in the public versions of the verification reports, which are on file
in the Central Records Unit (Room B-099 of the Main Commerce Building).
Analysis of Programs
I. Programs Conferring Subsidies
A. Pre-Shipment Export Financing
The Reserve Bank of India (``RBI''), through commercial banks,
provides short-term pre-shipment financing, or ``packing credits,'' to
exporters. Upon presentation of a confirmed export order or letter of
credit, companies may receive pre-shipment loans for working capital
purposes, i.e., for the purchase of raw materials and for packing,
warehousing, and transporting of export merchandise. Exporters may also
establish pre-shipment credit lines upon which they may draw as needed.
Credit line limits are established by commercial banks, based upon a
company's creditworthiness and past export performance. Companies that
have pre-shipment credit lines typically pay interest on a quarterly
basis on the outstanding balance of the account at the end of each
period. In general, packing credits are granted for a period of up to
180 days.
Commercial banks extending export credit to Indian companies must,
by law, charge interest on this credit at rates determined by the RBI.
During the POR, the rate of interest charged on pre-shipment export
loans was 13.0 percent. For packing credits not repaid within 180 days,
banks charged interest at 15.0 percent for the number of days the loan
was overdue. Exporters would lose the concessional interest rate if the
loan was not repaid within 270 days. If that occurred, banks were able
to charge a non-concessional interest rate above 15.0 percent. If the
pre-shipment loan was outstanding beyond 360 days, banks then charged
the cash credit rate from the first day of advance of the loan until
the exports were realized.
Interest charged under this program must be liquidated with export
proceeds. If the interest is paid with sources other than foreign
currency export proceeds, the interest element of the loan is not
treated as export credit, and is charged at rates applicable to
domestic credit. During the POR, if a company's exports did not
materialize, banks charged the cash credit rate plus a penal interest
rate of two (2.0) percent from the first day of advance of the loan.
The Department found this program to be an export subsidy, and thus
countervailable, in prior administrative reviews of this order, because
receipt of pre-shipment export financing was contingent upon export
performance, and the interest rates were preferential. See, e.g., Final
Results of Countervailing Duty Administrative Review: Certain Iron-
Metal Castings From India, 56 FR 41658 (August 22, 1991); Final Results
of Countervailing Duty Administrative Review: Certain Iron-Metal
Castings From India, 56 FR 52515 (October 21, 1991); and Final Results
of Countervailing Duty Administrative Review: Certain Iron-Metal
Castings From India, 61 FR 64676 (December 6, 1996) (``1987, 1988, and
1993 Indian Castings Final Results''). No new information or evidence
of changed circumstances has been submitted in this proceeding to
warrant reconsideration of this finding. Therefore, in accordance with
Sec. 771(5A)(B) of the Act, we continue to find that this program
constitutes an export subsidy.
To determine the benefit conferred under this program, we compared
the interest rate charged under the pre-shipment financing program to a
benchmark interest rate. In conducting this administrative review, we
learned that of the twelve respondents that received pre-shipment
financing on which interest was paid during the POR, four had received,
and paid interest on, commercial short-term working capital loans,
which were not provided under a GOI program. These companies are:
Calcutta Ferrous Ltd. (``Calcutta Ferrous''), Crescent Foundry Co. Pvt.
Ltd. (``Crescent Foundry''), Dinesh Brothers (P) Ltd. (``Dinesh''), and
Nandikeshwari Iron Foundry Pvt. Ltd. (``Nandikeshwari''). For these
companies, we used a company-specific benchmark interest rate to
measure the benefit each company received under the pre-shipment export
financing scheme.
For all other respondents, we used as our benchmark the cash credit
rate. In the 1994 administrative review of this order, the Department
determined that, in the absence of a company-specific benchmark, the
most ``comparable'' short-term benchmark to measure the benefit under
the pre-shipment export financing scheme is the cash credit interest
rate. See, Final Results of Countervailing Duty Administrative Review:
Certain Iron-Metal Castings From India, 62 FR 32297 (June 13, 1997)
(``1994 Indian Castings Final Results''). The cash credit interest rate
is for domestic working capital finance, and thus comparable to pre-and
post-shipment export working capital finance. During the POR, this rate
was 18.44 percent, as reported by the GOI in its April 9, 1998
questionnaire response.
We compared either the company-specific benchmark rates or the cash
credit benchmark rate, as appropriate, to the interest rates charged on
pre-shipment rupee loans and found that for loans granted under this
program, the interest rates charged were lower than the benchmark
rates. Therefore, in accordance with section 771(5)(E)(ii) of the Act,
this program conferred countervailable benefits during the POR because
the interest rates charged on these loans were less than what a company
otherwise would have had to pay on a comparable short-term commercial
loan.
To calculate the benefit from the pre-shipment loans, we compared
the actual interest paid on the loans with the amount of interest that
would have been paid at the applicable benchmark interest rate. Where
the benchmark rates exceeded the program rates, the difference between
those amounts is the benefit.
If the pre-shipment financing loans were provided solely to finance
exports of subject merchandise to the United States, we divided the
benefit derived from those loans by exports of subject merchandise to
the United States. For all other pre-shipment financing loans, we
divided the benefit by total exports to all destinations. On this
basis, we preliminarily determine the net subsidy from this program for
the producers/exporters of the subject merchandise to be as follows:
------------------------------------------------------------------------
Net subsidy
Net subsidies--producer/exporter rate-- percent
------------------------------------------------------------------------
Calcutta Ferrous Ltd.................................... 0.20
Commex Corporation...................................... 0.13
Crescent Foundry Co. Pvt. Ltd........................... 0.08
Dinesh Brothers Pvt. Ltd................................ 3.05
Kajaria Iron Castings Pvt. Ltd.......................... 0.33
Nandikeshwari Iron Foundry Pvt. Ltd..................... 0.22
R.B. Agarwalla & Company................................ 0.34
RSI Limited............................................. 0.37
Seramapore Industries Pvt. Ltd.......................... 0.53
Super Iron Foundry...................................... 1.11
Uma Iron & Steel........................................ 0.34
[[Page 37536]]
Victory Castings Ltd.................................... 0.30
------------------------------------------------------------------------
B. Post-Shipment Export Financing
Post-shipment export financing consists of loans in the form of
trade bill discounting or advances by commercial banks. The credit
covers the period from the date of shipment of the goods, to the date
of realization of export proceeds from the overseas customer. Post-
shipment finance, therefore, is a working capital finance or sales
finance against receivables. The interest amount owed is deducted from
the total amount of the bill at the time of discounting by the bank.
The exporter's account is then credited for the rupee equivalent of the
net amount.
In general, post-shipment loans are granted for a period of up to
90 days. The interest rate charged on these loans was 13.0 percent
during the POR. For loans not repaid within the negotiated number of
days (90 days maximum), banks assessed interest at 15.0 percent for the
number of days the loan was overdue, up to six months from the date of
shipment. Between February 8, 1996 and October 20, 1996, the RBI
``freed'' the interest rate charged on loans not repaid within 90 days,
and allowed banks to charge commercial interest rates on such credit.
On October 21, 1996, the RBI restored the 15.0 percent interest rate
for loans due beyond 90 days. For loans not repaid within 180 days,
exporters would lose the concessional interest rate on this financing,
and interest would be charged at a commercial rate determined by the
banks.
In prior administrative reviews, the Department found this program
to be an export subsidy because receipt of the post-shipment financing
was contingent upon export performance, and the interest rates were
preferential. See, e.g., 1987, 1988, and 1993 Indian Castings Final
Results. No new information or evidence of changed circumstances has
been submitted in this proceeding to warrant reconsideration of this
finding. Therefore, in accordance with section 771(5A)(B) of the Act,
we continue to find that this program constitutes an export subsidy.
During the POR, thirteen of the sixteen respondent companies made
payments on post-shipment loans for exports of subject castings to the
United States.
To determine the benefit conferred under this program, we compared
the interest rate charged under the post-shipment financing program to
a benchmark interest rate. For Calcutta Ferrous, Crescent Foundry,
Dinesh, and Nandikeshwari, we used as our benchmark, the company-
specific interest rates, discussed above, to measure the benefit each
company received under the post-shipment export financing scheme.
Because the loans under this program are discounted, and the effective
rate paid by the exporters on these post-shipment loans is a discounted
rate, we derived discounted benchmark rates from each company's
respective benchmark interest rate.
In regard to those respondents for which we did not have a company-
specific benchmark rate, we used as our benchmark, the cash credit rate
discussed above in the pre-shipment financing section. From the cash
credit benchmark, we derived a discounted rate of 15.57 percent for
measuring the benefits conferred by this program.
We compared either the discounted company-specific benchmark rates
or the discounted cash credit benchmark rate to the interest rates
charged on post-shipment loans and found that for loans granted under
this program, the interest rates charged were lower than the
benchmarks. Therefore, in accordance with section 771(5)(E)(ii) of the
Act, this program conferred countervailable benefits during the POR
where the interest rates charged on the loans were less than what a
company otherwise would have had to pay on a comparable short-term
commercial loan.
To calculate the benefit from these loans, we followed the same
short-term loan methodology discussed above for pre-shipment financing.
We divided the benefit by either total exports or exports of the
subject merchandise to the United States, depending on whether the
company was able to segregate its post-shipment financing by
merchandise and destination. For RSI Limited, however, we used as our
denominator, total exports of subject castings and non-subject castings
to the United States. On this basis, we preliminarily determine the net
subsidy from this program for the producers/exporters of the subject
merchandise to be as follows:
------------------------------------------------------------------------
Net subsidy
Net subsidies--producer/exporter rate--percent
------------------------------------------------------------------------
Calcutta Ferrous Ltd.................................... 0.78
Carnation Industries Ltd................................ 0.03
Commex Corporation...................................... 0.35
Crescent Foundry Co. Pvt. Ltd........................... 0.31
Dinesh Brothers Pvt. Ltd................................ 0.67
Kajaria Iron Castings Pvt. Ltd.......................... 0.42
Nandikeshwari Iron Foundry Pvt. Ltd..................... 0.27
R.B. Agarwalla & Company................................ 0.35
RSI Limited............................................. 0.20
Seramapore Industries Pvt. Ltd.......................... 0.05
Super Iron Foundry...................................... 0.12
Uma Iron & Steel........................................ 0.53
Victory Castings Ltd.................................... 0.40
------------------------------------------------------------------------
C. Post-Shipment Export Credit in Foreign Currency (``PSCFC'')
On January 1, 1992, the GOI introduced a modified post-shipment
financing scheme, i.e., Post-Shipment Export Credit in Foreign
Currency. (The GOI terminated the PSCFC scheme effective February 8,
1996.) This modified scheme enabled exporters to discount foreign
currency export bills at foreign currency interest rates linked to the
London Interbank Offering Interest Rate (``LIBOR''). Loans under this
financing scheme were not provided to the exporter in the foreign
currency, but the post-shipment credit liability of the exporter was
denominated in the foreign currency, which was then liquidated with
export proceeds in foreign currency. During the POR, PSCFC loans were
granted for a period of up to 90 days with an interest rate fixed by
the RBI. The interest amount, calculated at the applicable foreign
currency interest rate, was deducted from the total amount of the bill
at the time of discounting by the bank. The exporter's account was then
credited for the rupee equivalent of the net foreign currency amount.
During the POR, the interest rate charged on PSCFC loans ranged from
7.5 percent to 9.5 percent for the negotiated term of the loan (90 days
maximum). Interest on overdue loans was charged at 9.5 percent until
January 15, 1996. Thereafter, banks were free to charge commercial
interest rates on PSCFC loans not repaid within 90 days.
If the overseas customer defaulted and the export bill could not be
liquidated with export proceeds, the PSCFC loan was converted into
rupee credit at the selling foreign exchange rate prevailing on the day
of liquidation. The exporter was responsible for paying the rupee
equivalent of the bill at the exchange rate prevailing on the day of
liquidation by the bank. The interest recovered on the liquidated loan
was charged at a commercial rate determined by the bank.
Under the PSCFC program, companies had the option of converting
their export bills into rupees using either the spot rate of exchange
or the forward rate of exchange. During the POR, all respondent
companies, which used the PSCFC program, elected to convert their
export bills into rupees at the spot rate of exchange. If the bank
holding the
[[Page 37537]]
export bill, converted at the spot rate, realized an exchange rate gain
due to exchange rate movements up to the date the bill came due, the
bank was required, by law, to transfer the gain to the exporter.
However, if the bank suffered an exchange rate loss, the exporter, by
law, was obligated to cover that loss. Thus, the bank, in effect, faced
an exchange rate that was fixed over the ``life of the bill.'' Under
such circumstances, where the rupee value of the bill--from the bank's
standpoint--is, in fact, fixed at the time of discount, the rate of
discount measured in either dollars or rupees is the same. Therefore,
the PSCFC discount rate can be viewed equivalently as either a dollar-
denominated rate or a rupee-denominated rate. If viewed as a dollar-
denominated rate, no exchange rate adjustment to the rupee-denominated
benchmark is warranted, because the banks face no exchange rate risk in
holding the bills. Thus, no matter how the PSCFC discount rate is
viewed, a rupee-benchmark is appropriate for benefit calculation
purposes where the exporter opts to convert the exports bills using the
spot rate of exchange.
In the 1993 Indian Castings Final Results, the Department found
this program to be an export subsidy, and thus countervailable, because
receipt of PSCFC loans was contingent upon export performance, and the
interest rates were preferential. No new information or evidence of
changed circumstances has been submitted in this proceeding to warrant
reconsideration of this finding. Therefore, in accordance with
Sec. 771(5A)(B) of the Act, we continue to find that this program
constitutes an export subsidy. During the POR, five of the sixteen
respondent companies made payments on PSCFC loans for shipments of
subject castings to the United States.
To determine the benefit conferred under this program, we compared
the interest rate charged under the PSCFC to a benchmark interest rate.
For Calcutta Ferrous, Dinesh, and Nandikeshwari, we used as our
benchmark, the company-specific interest rates, discussed above, to
measure the benefit each company received under the PSCFC. Because the
loans under this program are discounted, and the effective rate paid by
the exporters on the PSCFC loans is a discounted rate, we derived
discounted benchmark rates from each company's respective company-
specific benchmark interest rate.
In regard to those respondents for which we did not have a company-
specific benchmark rate, we used as our benchmark, the cash credit rate
discussed above in the pre-shipment financing section. From the cash
credit benchmark, we derived a discounted rate of 15.57 percent for
measuring the benefits conferred by this program.
We compared either the company-specific benchmark discounted rates
or the discounted cash credit benchmark rate to the interest rates
charged on the PSCFC loans and found that the interest rates charged
were lower than the benchmarks. Therefore, in accordance with section
771(5)(E)(ii) of the Act, this program conferred countervailable
benefits during the POR because the interest rates charged on these
loans were less than what a company otherwise would have had to pay on
a comparable short-term commercial loan.
To calculate the benefit from these loans, we followed the same
short-term loan methodology discussed above for pre-shipment financing.
We divided the benefit by either total exports or exports of the
subject merchandise to the United States, depending on whether the
company was able to segregate its PSCFC financing by merchandise and
destination. For RSI Limited, however, we used as our denominator,
total exports of subject castings and non-subject castings to the
United States. On this basis, we preliminarily determine the net
subsidy from this program to be as follows:
------------------------------------------------------------------------
Net subsidy
Net subsidies--producer/exporter rate--percent
------------------------------------------------------------------------
Calcutta Ferrous Ltd.................................... 0.06
Dinesh Brothers Pvt. Ltd................................ 0.15
Nandikeshwari Iron Foundry Pvt. Ltd..................... 0.08
R.B. Agarwalla & Company................................ 0.11
RSI Limited............................................. 0.08
------------------------------------------------------------------------
As noted above, the GOI terminated the PSCFC scheme effective
February 8, 1996. All PSCFC loans received by the five above listed
companies were repaid in their entirety (principal and interest) during
the POR. We verified that no residual benefits have been provided or
received, and there is no evidence that a substitute program has been
established. Therefore, in determining the cash deposit rates for these
five castings producers/exporters, we will not include the subsidy
conferred by this program during the POR.
D. Income Tax Deductions Under Section 80HHC
Under section 80HHC of the Income Tax Act, the GOI allows exporters
to deduct profits derived from the export of merchandise from taxable
income. In prior administrative reviews of this order, the Department
found this program to be an export subsidy, and thus countervailable,
because receipt of benefits was contingent upon export performance.
See, e.g., 1993 Indian Castings Final Results. No new information or
evidence of changed circumstances has been submitted in this proceeding
to warrant reconsideration of this finding. Therefore, in accordance
with section771(5A)(B) of the Act, we continue to find that this
program constitutes an export subsidy, and that the financial
contribution in the form of tax revenue not collected, constitutes the
benefit.
To calculate the benefit to each company, we subtracted the total
amount of income tax the company actually paid during the review period
from the amount of tax the company otherwise would have paid during the
review period had it not claimed any deductions under section 80HHC. We
then divided this difference by the value of the company's total
exports. On this basis, we preliminarily determine the net subsidy from
this program to be as follows:
------------------------------------------------------------------------
Net subsidy
Net subsidies--producer/exporter rate--percent
------------------------------------------------------------------------
Calcutta Ferrous Ltd.................................... 2.91
Carnation Industries Ltd................................ 2.92
Commex Corporation...................................... 4.79
Crescent Foundry Co. Pvt. Ltd........................... 4.53
Dinesh Brothers Pvt. Ltd................................ 5.31
Kajaria Iron Castings Pvt. Ltd.......................... 0.00
Kejriwal Iron & Steel Works Pvt. Ltd.................... 11.76
Nandikeshwari Iron Foundry Pvt. Ltd..................... 3.71
Overseas Iron Foundry................................... 3.74
R.B. Agarwalla & Company................................ 2.73
RSI Limited............................................. 2.73
Seramapore Industries Pvt. Ltd.......................... 4.16
Shree Rama Enterprise................................... 10.85
Super Iron Foundry...................................... 1.93
Uma Iron & Steel........................................ 0.40
Victory Castings Ltd. 2.91.............................. 2.17
------------------------------------------------------------------------
E. Import Mechanisms (Sale of Licenses)
The GOI allows companies to transfer certain types of import
licenses to other companies in India. In prior administrative reviews
of this order, the Department found the sale of these licenses to be an
export subsidy, and thus countervailable, because companies received
these licenses based on their status as exporters. See, e.g., 1993
Indian Castings Final Results. No new information or evidence of
changed circumstances has been submitted in this proceeding to warrant
reconsideration of this finding. Therefore, in accordance with section
771(5A)(B) of the Act, we continue to
[[Page 37538]]
find that this program constitutes an export subsidy, and the financial
contribution in the form of the revenue received on the sale of
licenses, constitutes the benefit.
During the POR, five of the sixteen respondent companies sold
Special Import Licenses. Because the sale of the Special Import
Licenses were not tied to specific shipments, we calculated the
subsidies by dividing the total amount of proceeds a company received
from the sale of these licenses by the total value of its exports of
all products to all markets. We preliminarily determine the net subsidy
from the sale of the Special Import Licenses for these five companies
to be as follows:
------------------------------------------------------------------------
Net subsidy
Net subsidies--producer/exporter rate--percent
------------------------------------------------------------------------
Carnation Industries Ltd................................ 0.24
Kajaria Iron Castings Pvt. Ltd.......................... 0.68
Kejriwal Iron & Steel Works............................. 1.00
RSI Limited............................................. 0.03
Seramapore Industries Pvt. Ltd.......................... 0.73
------------------------------------------------------------------------
F. Exemption of Export Credit from Interest Taxes
Indian commercial banks are required to pay a tax on all interest
accrued from borrowers. The banks pass along this tax to borrowers in
its entirety. As of April 1, 1993, the GOI exempted from the interest
tax all interest accruing to a commercial bank on export-related loans.
In the 1993 administrative review, we determined that this tax
exemption is an export subsidy and thus countervailable, because only
interest accruing on loans and advances made to exporters in the form
of export credit is exempt from the interest tax. See, 1993 Indian
Castings Final Results. No new information or evidence of changed
circumstances has been submitted in this proceeding to warrant
reconsideration of this finding. Therefore, in accordance with
Sec. 771(5A)(B) of the Act, we continue to find that this program
constitutes an export subsidy, and that the financial contribution in
the form of tax revenue not collected, constitutes the benefit.
During the POR, thirteen of the sixteen respondent companies made
interest payments on export-related loans, through the pre- and post-
shipment financing schemes, and thus, were exempt from the interest tax
under this program. To calculate the benefit to each company, we first
determined the total amount of interest paid by each producer/exporter
of subject castings during the POR by adding the interest payments made
on all pre- and post-shipment export loans. Next, we multiplied this
amount by three (3.0) percent, the tax rate that the interest would
have been subject to without the exemption during the POR. We then
divided the benefit by the value of the company's total exports or
exports of subject merchandise to the United States, depending on
whether the export financing was tied to total exports or only exports
of subject castings to the United States. For RSI Limited, however, to
determine the benefit conferred from the exemption of interest on the
company's post-shipment financing, we used as our denominator, total
exports of subject castings and non-subject castings to the United
States. On this basis, we preliminarily determine the net subsidy from
this program to be as follows:
------------------------------------------------------------------------
Net subsidy
Net subsidies--producer/exporter rate--percent
------------------------------------------------------------------------
Calcutta Ferrous Ltd.................................... 0.14
Carnation Industries Ltd................................ 0.13
Commex Corporation...................................... 0.06
Crescent Foundry Co. Pvt. Ltd........................... 0.06
Dinesh Brothers Pvt. Ltd................................ 0.39
Kajaria Iron Castings Pvt. Ltd.......................... 0.26
Nandikeshwari Iron Foundry Pvt. Ltd..................... 0.13
R.B. Agarwalla & Company................................ 0.11
RSI Limited............................................. 0.22
Seramapore Industries Pvt. Ltd.......................... 0.07
Super Iron Foundry...................................... 0.16
Uma Iron & Steel........................................ 0.11
Victory Castings Ltd.0.14............................... 0.18
------------------------------------------------------------------------
II. Programs Preliminarily Found To Be Not Used
We examined the following programs and preliminarily find that the
producers/exporters of the subject merchandise did not apply for or
receive benefits under these programs during the POR:
1. Market Development Assistance (MDA)
2. Rediscounting of Export Bills Abroad (EBR)
3. International Price Reimbursement Scheme (IPRS)
4. Cash Compensatory Support Program (CCS)
5. Programs Operated by the Small Industries Development Bank of India
(SIDBI)
6. Export Promotion Replenishment Scheme (EPRS) (IPRS Replacement)
7. Export Promotion Capital Goods Scheme
8. Benefits for Export Oriented Units and Export Processing Zones
9. Special Imprest Licenses
10. Special Benefits
11. Duty Drawback on Excise Taxes
12. Payment of Premium Against Advance Licenses
13. Pre-Shipment Export Financing in Foreign Currency (PCFC).
Preliminary Results of Review
In accordance with 19 C.F.R. Sec. 351.221(b)(4)(i), we calculated
an individual subsidy rate for each producer/exporter subject to this
administrative review. For the period January 1, 1996 through December
31, 1996, we preliminarily determine the net subsidy for the reviewed
companies to be as follows:
------------------------------------------------------------------------
Net subsidy
Net subsidies--producer/exporter rate--percent
------------------------------------------------------------------------
Calcutta Ferrous Ltd.................................... 4.09
Carnation Industries Ltd................................ 3.32
Commex Corporation...................................... 5.33
Crescent Foundry Co. Pvt. Ltd........................... 4.98
Dinesh Brothers Pvt. Ltd................................ 9.57
Kajaria Iron Castings Pvt. Ltd.......................... 1.69
Kejriwal Iron & Steel Works Pvt. Ltd.................... 12.76
Nandikeshwari Iron Foundry Pvt. Ltd..................... 4.41
Overseas Iron Foundry................................... 3.74
R.B. Agarwalla & Company Pvt. Ltd....................... 3.64
RSI Limited............................................. 3.63
Seramapore Industries Pvt. Ltd.......................... 5.54
Shree Rama Enterprise................................... 10.85
Super Iron Foundry...................................... 3.32
Uma Iron & Steel........................................ 1.38
Victory Castings Ltd.................................... 3.05
------------------------------------------------------------------------
If the final results of this review remain the same as these
preliminary results, the Department intends to instruct the U.S.
Customs Service (``Customs'') to assess countervailing duties as
indicated above.
The Department also intends to instruct Customs to collect cash
deposits of estimated countervailing duties as indicated below, of the
f.o.b. invoice price on all shipments of the subject merchandise from
reviewed companies, entered, or withdrawn from warehouse, for
consumption on or after the date of publication of the final results of
this review. Because the Post-Shipment Export Credit in Foreign
Currency program was terminated effective February 8, 1996, we are not
including the subsidy conferred by this program during the review
period, in determining the cash deposits to be collected by Customs. We
preliminarily determine the cash deposit rates for the reviewed
companies to be as follows:
------------------------------------------------------------------------
Net subsidy
Net Subsidies--Producer/Exporter rate--percent
------------------------------------------------------------------------
Calcutta Ferrous Ltd.................................... 4.03
[[Page 37539]]
Carnation Industries Ltd................................ 3.32
Commex Corporation...................................... 5.33
Crescent Foundry Co. Pvt. Ltd........................... 4.98
Dinesh Brothers Pvt. Ltd................................ 9.42
Kajaria Iron Castings Pvt. Ltd.......................... 1.69
Kejriwal Iron & Steel Works Pvt. Ltd.................... 12.76
Nandikeshwari Iron Foundry Pvt. Ltd..................... 4.33
Overseas Iron Foundry................................... 3.74
R.B. Agarwalla & Company Pvt. Ltd....................... 3.53
RSI Limited............................................. 3.55
Seramapore Industries Pvt. Ltd.......................... 5.54
Shree Rama Enterprise................................... 10.85
Super Iron Foundry...................................... 3.32
Uma Iron & Steel........................................ 1.38
Victory Castings Ltd.................................... 3.05
------------------------------------------------------------------------
Because the URAA replaced the general rule in favor of a country-
wide rate with a general rule in favor of individual rates for
investigated and reviewed companies, the procedures for establishing
countervailing duty rates, including those for non-reviewed companies,
are now essentially the same as those in antidumping cases, except as
provided for in section 777A(e)(2)(B) of the Act. The requested review
will normally cover only those companies specifically named. See 19
C.F.R. 351.213(b). Pursuant to 19 C.F.R. 351.212(c), for all companies
for which a review was not requested, duties must be assessed at the
cash deposit rate, and cash deposits must continue to be collected, at
the rate previously ordered. As such, the countervailing duty cash
deposit rate applicable to a company can no longer change, except
pursuant to a request for a review of that company. See, Federal-Mogul
Corporation and the Torrington Company v. United States, 822 F.Supp.
782 (CIT 1993) and Floral Trade Council v. United States, 822 F.Supp.
766 (CIT 1993) (interpreting 19 C.F.R. 353.22(e) (now 19 C.F.R.
351.212(c)), the antidumping regulation on automatic assessment, which
is identical to 19 C.F.R. 355.22(g)). Therefore, the cash deposit rates
for all companies except those covered by this review will be unchanged
by the results of this review.
We will instruct Customs to continue to collect cash deposits for
non-reviewed companies at the most recent company-specific or country-
wide rate applicable to the company. Accordingly, the cash deposit
rates that will be applied to non-reviewed companies covered by this
order will be the rate for that company established in the most
recently completed administrative proceeding conducted under the URAA.
See, 1994 Indian Castings Final Results. If such a review has not been
conducted, the rate established in the most recently completed
administrative proceeding pursuant to the statutory provisions that
were in effect prior to the URAA amendments is applicable. See, 1993
Indian Castings Final Results. These rates shall apply to all non-
reviewed companies until a review of a company assigned these rates is
requested. In addition, for the period January 1, 1996 through December
31, 1996, the assessment rates applicable to all non-reviewed companies
covered by this order are the cash deposit rates in effect at the time
of entry.
Public Comment
Pursuant to 19 C.F.R. 351.224(b), the Department will disclose to
the parties of this proceeding within five days after the date of
publication of this notice, the calculations performed in this review.
Interested parties may request a hearing not later than 30 days after
the date of publication of this notice. Interested parties may submit
written arguments in case briefs on these preliminary results within 30
days of the date of publication. Rebuttal briefs, limited to arguments
raised in case briefs, may be submitted five days after the time limit
for filing the case brief. Parties who submit argument in this
proceeding are requested to submit with the argument (1) a statement of
the issue and (2) a brief summary of the argument. Any hearing, if
requested, will be held two days after the scheduled date for
submission of rebuttal briefs. Copies of case briefs and rebuttal
briefs must be served on interested parties in accordance with 19
C.F.R. 351.303(f).
Representatives of parties to the proceeding may request disclosure
of proprietary information under administrative protective order no
later than 10 days after the representative's client or employer
becomes a party to the proceeding, but in no event later than the date
the case briefs, under 19 C.F.R. 351.309(c)(ii), are due. The
Department will publish the final results of this administrative
review, including the results of its analysis of issues raised in any
case or rebuttal brief or at a hearing.
This administrative review and notice are issued and published in
accordance with section 751(a)(1) of the Act (19 U.S.C. 1675(a)(1)), 19
C.F.R. 351.213.
Dated: July 6, 1998.
Richard W. Moreland,
Acting Assistant Secretary for Import Administration.
[FR Doc. 98-18598 Filed 7-10-98; 8:45 am]
BILLING CODE 3510-DS-P