[Federal Register Volume 72, Number 150 (Monday, August 6, 2007)]
[Notices]
[Pages 43607-43616]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E7-15215]
-----------------------------------------------------------------------
DEPARTMENT OF COMMERCE
International Trade Administration
[C-533-825]
Polyethylene Terephthalate Film, Sheet, and Strip From India:
Preliminary Results and Rescission, in Part, of Countervailing Duty
Administrative Review
AGENCY: Import Administration, International Trade Administration,
Department of Commerce.
SUMMARY: The Department of Commerce (the Department) is conducting an
administrative review of the countervailing duty order on polyethylene
terephthalate (PET) film from India for the period January 1, 2005
through December 31, 2005. We preliminarily determine that subsidies
are being provided on the production and export of PET film from India.
See the ``Preliminary Results of Administrative Review'' section,
below. If the final results remain the same as the preliminary results
of this review, we will instruct U.S. Customs and Border Protection
(CBP) to assess countervailing duties. Interested parties are invited
to comment on the preliminary results of this administrative review.
See the ``Public Comment'' section of this notice, below.
DATES: Effective Date: August 6, 2007.
FOR FURTHER INFORMATION CONTACT: Elfi Blum or Toni Page, AD/CVD
Operations, Office 6, Import Administration, International Trade
Administration, U.S. Department of Commerce, 14th Street and
Constitution Avenue, NW., Washington, DC 20230; telephone: (202) 482-
0197 or (202) 482-1398, respectively.
SUPPLEMENTARY INFORMATION:
Background
On July 1, 2002, the Department published in the Federal Register
the countervailing duty (CVD) order on PET film from India. See
Countervailing Duty Order: Polyethylene Terephthalate Film, Sheet and
Strip (PET Film) from India, 67 FR 44179 (July 1, 2002) (PET Film
Order). On July 3, 2006, the Department published in the Federal
Register a notice of opportunity to request an administrative review of
this order. See Antidumping or Countervailing Duty Order, Finding, or
Suspended Investigation; Opportunity to Request Administrative Review,
71 FR 37890 (July 3, 2006). On July 26, 2006 and July 31, 2006, the
Department received requests to conduct an administrative review of the
CVD order on PET film from India from MTZ Polyfilms, Ltd. (MTZ), Jindal
Poly Films Limited of India (Jindal), formerly named Jindal Polyester
Limited, Polyplex Corporation, Ltd. (Polyplex), and Garware Polyester,
Ltd. (Garware), all of whom are Indian producers and exporters of
subject merchandise. Dupont Teijin Films, Mitsubishi Polyester Film of
America, and Toray Plastics (America), (collectively, petitioners) did
not file any requests for review.
On August 22, 2006, Polyplex withdrew its request for review of the
CVD order of PET film from India. Since its withdrawal occurred prior
to the date of initiation and because no other party requested a review
of Polyplex, we did not include this company in the initiation of the
administrative review. On August 30, 2006, the Department initiated an
administrative review of the CVD order on PET film from India
[[Page 43608]]
covering MTZ, Jindal, and Garware, for the period January 1, 2005
through December 31, 2005. See Initiation of Antidumping and
Countervailing Duty Administrative Reviews and Requests for Revocation
in Part, 71 FR 51573 (August 30, 2006). The Department issued
questionnaires to the Government of India (GOI), Garware, MTZ, and
Jindal on November 7, 2006. On November 28, 2006, pursuant to 19 CFR
351.213(d)(1), Jindal timely withdrew its request for an administrative
review of the CVD order on PET film from India. Because no other party
requested a review of Jindal, on April 10, 2007, the Department
rescinded the administrative review of Jindal. See Polyethylene
Terephthalate Film, Sheet, and Strip from India: Notice of Partial
Rescission of Administrative Review of the Countervailing Duty Order,
72 FR 17838 (April 10, 2007).
On January 5, 2007, both the GOI and Garware submitted their
questionnaire responses. MTZ submitted its questionnaire response on
January 12, 2007. The Department issued its first supplemental
questionnaires to the GOI, Garware, and MTZ on March 16, 2007.
On April 5, 2007, the Department extended the time limit for the
preliminary results of the countervailing duty administrative review
until July 31, 2007. See Polyethylene Terephthalate (PET) Film, Sheet,
and Strip from India: Extension of Time Limit for Preliminary Results
of Countervailing Duty Administrative Review, 72 FR 16769 (April 5,
2007).
On April 13, 2007, the GOI submitted its first supplemental
response. Both Garware and MTZ submitted their first supplemental
responses on April 16, 2007, and April 18, 2007, respectively. On June
11, 2007, the Department issued a second supplemental questionnaire to
the GOI, Garware, and MTZ. The Department issued a third supplemental
questionnaire to MTZ on June 13, 2007. The GOI submitted its response
to the second supplemental questionnaire on June 25, 2007, and Garware
responded on July 2, 2007. MTZ responded to the Department's second and
third supplemental questionnaires on July 6, 2007.
Verification
As provided in section 782(i)(3) of the Tariff Act of 1930, as
amended (the Act), we intend to conduct verification of the GOI,
Garware, and MTZ questionnaire responses following the issuance of the
preliminary results.
Scope of the Order
For purposes of the order, the products covered are all gauges of
raw, pretreated, or primed Polyethylene Terephthalate Film, Sheet and
Strip, whether extruded or coextruded. Excluded are metallized films
and other finished films that have had at least one of their surfaces
modified by the application of a performance-enhancing resinous or
inorganic layer of more than 0.00001 inches thick. Imports of PET film
are classifiable in the Harmonized Tariff Schedule of the United States
(HTSUS) under item number 3920.62.00. HTSUS subheadings are provided
for convenience and customs purposes. The written description of the
scope of this proceeding is dispositive.
Subsidies Valuation Information
Allocation Period
Under 19 CFR 351.524(d)(2)(i), we will presume the allocation
period for non-recurring subsidies to be the average useful life (AUL)
prescribed by the Internal Revenue Service (IRS) for renewable physical
assets of the industry under consideration (as listed in the IRS's 1977
Class Life Asset Depreciation Range System, and as updated by the
Department of the Treasury). This presumption will apply unless a party
claims and establishes that these tables do not reasonably reflect the
AUL of the renewable physical assets of the company or industry under
investigation. Specifically, the party must establish that the
difference between the AUL from the tables and the company-specific AUL
or country-wide AUL for the industry under investigation is
significant, pursuant to 19 CFR 351.524(d)(2)(i) and (ii). For assets
used to manufacture plastic film, such as PET film, the IRS tables
prescribe an AUL of 9.5 years.\1\
---------------------------------------------------------------------------
\1\ For our subsidy calculations, we round the 9.5 years up to
10 years.
---------------------------------------------------------------------------
In the investigative segment of this proceeding, the Department
determined that Garware had rebutted the presumption and applied a
company-specific AUL of 19 years. See Final Affirmative Countervailing
Duty Determination: Polyethylene Terephthalate Film, Sheet, and Strip
(PET Film), 67 FR 34905 (May 16, 2002), and accompanying Issues and
Decision Memorandum, at ``Allocation Period'' (PET Film Final
Determination). Therefore, the Department is using an AUL of 19 years
for Garware in allocating non-recurring subsidies. MTZ was not a
respondent in the original investigation, nor was the company a
respondent in any prior segment of this proceeding. In response to the
Department's original questionnaire and its first supplemental
questionnaire, MTZ proposed a company-specific AUL of 19.9 years for
its plant and machinery. In Exhibits S-7 to S-8(c) of its first
supplemental response, MTZ provided its depreciation schedule over the
past 10 years, and a detailed list of assets for plant and machinery,
respectively. However, MTZ has not demonstrated how the detailed list
was tied to its depreciation schedule through the POR,\2\ or how the
depreciation schedule was ultimately tied to MTZ's 2005-2006 financial
statements. Furthermore, MTZ did not provide an explanation of how it
derived its depreciation schedule. Based on these concerns, we
preliminarily determine that MTZ's calculation of its company-specific
AUL should not be used to determine the appropriate allocation period
for non-recurring subsidies. Rather, for purposes of these preliminary
results we are using the IRS Tables. Benchmark Interest Rates and
Discount Rates.
---------------------------------------------------------------------------
\2\ The detail for plant and machinery is only provided through
March 2003.
---------------------------------------------------------------------------
For programs requiring the application of a benchmark interest rate
or discount rate, 19 CFR 351.505(a)(1) states a preference for using an
interest rate that the company could have obtained on a comparable loan
in the commercial market. Also, 19 CFR 351.505(a)(3)(i) stipulates that
when selecting a comparable commercial loan that the recipient ``could
actually obtain on the market'' the Department will normally rely on
actual short-term and long-term loans obtained by the firm. However,
when there are no comparable commercial loans, the Department may use a
national average interest rate, pursuant to 19 CFR 351.505(a)(3)(ii).
In addition, 19 CFR 351.505(a)(2)(ii) states that the Department
will not consider a loan provided by a government-owned special purpose
bank for purposes of calculating benchmark rates. The Department has
previously determined that the Industrial Development Bank of India
(IDBI) is a government-owned special purpose bank. See Final Results of
Countervailing Duty Administrative Review: Polyethylene Terephthalate
Film, Sheet, and Strip from India, 71 FR 7534 (February 13, 2006), and
accompanying Issues and Decision Memorandum, at Comment 3, (Second PET
Film Review--Final Results). As such, the Department did not use loans
from the IDBI reported by Garware. Further, in this review, the
Department
[[Page 43609]]
preliminarily determines that the Industrial Finance Corporation of
India (IFCI) and the Export-Import Bank of India (EXIM) \3\ are
government-owned special purpose banks. As such, the Department did not
use loans from IFCI reported by Garware and MTZ, and loans from EXIM
reported by Garware, in the benchmark calculations for this
administrative review.
---------------------------------------------------------------------------
\3\ Id. This is based on information we obtained from the
internet indicating this bank functions ``as the principal financial
institution for coordinating the working of institutions engaged in
financing export and import of goods and services * * * .''
---------------------------------------------------------------------------
Pursuant to 19 CFR 351.505(a)(2)(iv), if a program under review is
a government-provided, short-term loan program, the preference would be
to use a company-specific annual average of the interest rates on
comparable commercial loans during the year in which the government-
provided loan was taken out, weighted by the principal amount of each
loan. For this review, the Department required a rupee-denominated
short-term loan benchmark rate to determine benefits received under the
Pre-Shipment Export Financing and Post-Shipment Export Financing
programs. MTZ reported that it did not receive any loans under the GOI
Pre-Shipment and Post-Shipment Export Financing programs.\4\
---------------------------------------------------------------------------
\4\ See MTZ's Original Questionnaire Response, at III-12
(January 12, 2007).
---------------------------------------------------------------------------
Garware provided information on rupee-denominated and U.S. dollar-
denominated short-term commercial loans outstanding during the period
of review (POR). Garware reported that it did receive the following
rupee-denominated short-term commercial loans: Supplier Bill
Discounting (SBD); Local Bill Discounting (LBD); Working Capital
Development Loans (WCDL); and Cash Credit (CC).
In previous reviews of this case, the Department has determined
that Inland Bill Discounting (IBD) loans are more comparable to pre-
shipment and post-shipment export financing loans than other types of
rupee-denominated short-term loans. See Preliminary Results and
Rescission in Part of Countervailing Duty Administrative Review:
Polyethylene Terephthalate Film, Sheet, and Strip from India, 70 FR
46483, 46485 (August 10, 2005) (Second PET Film Review--Preliminary
Results) (unchanged in the final results); and Issues Memorandum--First
Review, at 10. There is no new information or evidence of changed
circumstances that would warrant reconsidering this finding. Therefore,
for these preliminary results, we continue to use IBD (LBD) loans as
the basis for the short-term rupee-denominated benchmark for all
applicable programs for Garware.
Garware provided information on U.S. dollar-denominated working
capital trade loans (WCTL) received during the POR to use as the basis
for dollar-denominated short-term benchmark rates. Because these loans
were obtained from government-owned special purpose banks, the
Department is using a national average dollar-denominated short-term
interest rate, as reported in the International Monetary Fund's
publication ``International Financial Statistics'' (IMF Statistics) for
Garware, in accordance with 19 CFR 351.505(a)(3)(ii).
For those programs requiring a rupee-denominated discount rate or
the application of a rupee-denominated long-term benchmark rate, we
used national average interest rates from the IMF Statistics, pursuant
to 19 CFR 351.505(a)(3)(ii). With respect to long-term loans and grants
allocated over time, the Department required benchmarks and discount
rates to determine benefits received under the Export Promotion Capital
Goods Scheme (EPCGS) program. None of the respondents \5\ reported
comparable commercial long-term rupee-denominated loans for all
required years. Normally, for those years for which we did not have
company-specific information, the Department relies on comparable long-
term rupee-denominated benchmark interest rates from the immediately
preceding year as directed by 19 CFR 351.505(a)(2)(iii). When there
were no comparable long-term, rupee-denominated loans from commercial
banks during either the year under consideration or the preceding year,
the Department uses national average interest rates from the IMF
Statistics, pursuant to 19 CFR 351.505(a)(3)(ii). Since neither Garware
nor MTZ had long-term rupee-denominated benchmark interest rates from
the immediately preceding year, we relied on the IMF statistics as
benchmarks for the required years.
---------------------------------------------------------------------------
\5\ MTZ provided the Department with limited information
regarding its long-term benchmarks on three separate occasions: See
MTZ's original questionnaire response of January 12, 2007; MTZ's
First Supplemental Response, at 11-12, and Exhibit S-9 (April 18,
2007), and MTZ's Second Supplemental Response, at 7-8 and Exhibit
S3-4a (July 2, 2007). The average interest rates provided in the
first supplemental response are supported by bank ledger accounts
including postings covering approximately ten years. MTZ did not
demonstrate how the supporting documentation tied to its benchmark
calculation. Further, MTZ stated that it provided support for the
long-term interest rates from its banks in Exhibit S-9. MTZ did not
clearly identify which supporting information pertains to its long-
term loans. In its second supplemental response MTZ provided long-
term loan information for 1995, 1996, and 1997, but MTZ did not
calculate average long-term benchmarks for the POR.
---------------------------------------------------------------------------
Cross-Ownership and Attribution of Subsidies
In the final determination of the investigation, the Department
determined that cross-ownership exists between Garware and Garware
Chemicals, Ltd., in accordance with 19 CFR 351.525(b)(6)(vi). See PET
Film Final Determination--Decision Memorandum, at Comment 15. In the
original questionnaire of the instant review, we asked Garware to
identify all affiliated companies and to describe in detail the nature
of its relationship with those companies. Garware responded that
Garware Chemical, Ltd. (Garware Chemical) is an affiliated producer of
Di-methyl Terephthalate (DMT), which is a primary input into the
production of PET film. In the same response, Garware indicated that
Garware Chemical did not receive a subsidy.\6\ Garware's financial
statements submitted in the same response indicate that Garware
Chemical is an associate company of Garware and that Garware Chemical
shares directors with Garware. These financial statements also indicate
that Garware guaranteed Garware Chemical's loans and that Garware owns
shares of Garware Chemical.\7\
---------------------------------------------------------------------------
\6\ See Garware's original questionnaire response of January 5,
2007, at 1-2 and Exhibit 1.
\7\ See Garware's original questionnaire response of January 5,
2007, Exhibit 3, Financial Statements 2005-2006, at 32 and 64-65.
---------------------------------------------------------------------------
In the first supplemental questionnaire, we requested Garware to
provide more detail regarding Garware Chemical's supply of inputs in
the production of subject merchandise. In its response, Garware
clarified that Garware Chemicals is not a subsidiary company of Garware
but an affiliated company.\8\ In response to the Department's second
supplemental questionnaire, in which we asked Garware to explain and
provide documentation as to whether Garware Chemical had participated
in GOI programs, Garware stated that Garware Chemical participated in
three programs: The GOI's Export Promotion Capital Goods Scheme
(EPCGS), the State of Maharashtra (SOM) Sales Tax Incentive Program,
and the SOM Electricity Duty Exemption. In the same supplemental
questionnaire we asked Garware to explain its affiliate relationship to
Garware Chemical in more detail; however, it only stated that Garware
Chemicals is an ``associate company,'' in response to our question.
Garware did not provide any
[[Page 43610]]
explanation for its differentiation in terminology, i.e., affiliate,
subsidiary, and associate company. However, the record is clear that
Garware owns a part of Garware Chemical, that Garware guaranteed
Garware Chemical's loans, and that the two companies share at least one
director. Based on these facts, we continue to find, as we did in the
investigation, that Garware and Garware Chemical are cross-owned in
accordance with 19 CFR 351.525(b)(6)(vi).
---------------------------------------------------------------------------
\8\ See Garware's first supplemental response of July 2, 2007,
at 3-4.
---------------------------------------------------------------------------
In order to attribute the benefits received by Garware Chemical to
Garware, the Department needs Garware Chemical's sales information
(i.e., total sales less any sales to Garware). Since this information
was not provided, the Department is using facts available, in
accordance with section 776(a)(2)(A) of the Act, to calculate Garware's
subsidy rates. Accordingly, for these preliminary results, we will
attribute the subsidies received by Garware Chemical to Garware,
pursuant to 19 CFR 351.525(b)(6)(iv) and (vi), without any adjustment
to the sales denominator. However, we intend to provide Garware a final
opportunity to submit the sales information necessary for these
calculations.
Programs Preliminarily Determined To Be Countervailable
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. Upon presentation of a confirmed export order or letter of
credit to a bank, companies may receive pre-shipment loans for working
capital purposes (i.e., purchasing raw materials, warehousing, packing,
transportation, etc.) for merchandise destined for exportation.
Companies may also establish pre-shipment credit lines upon which they
draw as needed. Limits on credit lines are established by commercial
banks and are based on a company's creditworthiness and past export
performance. Credit lines may be denominated either in Indian rupees or
in a foreign currency. Commercial banks extending export credit to
Indian companies must, by law, charge interest at rates determined by
the RBI.
Post-shipment export financing consists of loans in the form of
discounted trade bills or advances by commercial banks. Exporters
qualify for this program by presenting their export documents to the
lending bank. The credit covers the period from the date of shipment of
the goods to the date of realization of the proceeds from the sale to
the overseas customer. Under the Foreign Exchange Management Act of
1999, exporters are required to realize proceeds from their export
sales within 180 days of shipment. Post-shipment financing is,
therefore, a working capital program used to finance export
receivables. In general, post-shipment loans are granted for a period
of not more than 180 days.
In the investigation, the Department determined that the pre-
shipment and post-shipment export financing programs conferred
countervailable subsidies on the subject merchandise because: (1) The
provision of the export financing constitutes a financial contribution
pursuant to section 771(5)(D)(i) of the Act as a direct transfer of
funds in the form of loans; (2) the provision of the export financing
confers benefits on the respondents under section 771(5)(E)(ii) of the
Act in as much as the interest rates given under these programs are
lower than commercially available interest rates; and (3) these
programs are specific under section 771(5A)(B) of the Act because they
are contingent upon export performance. See PET Film Final
Determination--Decision Memorandum at ``Pre-Shipment and Post-Shipment
Financing.'' There is no new information or evidence of changed
circumstances that would warrant reconsidering this finding. Therefore,
for these preliminary results, we continue to find this program
countervailable.
Garware was the only respondent who received benefits under this
program during the POR. The benefit conferred by the pre-shipment and
post-shipment loans is the difference between the amount of interest
the company paid on the government loan and the amount of interest it
would have paid on a comparable commercial loan during the POR. Because
pre-shipment loans are not tied to exports of subject merchandise, we
calculated the subsidy rate for these loans by dividing the total
benefit by the value of Garware's total exports during the POR. Because
post-shipment loans are normally tied to specific shipments of a
particular product to a particular country, we normally divide the
total benefit from post-shipment loans tied to exports of subject
merchandise to the United States by the value of total exports of
subject merchandise to the United States during the POR. See 19 CFR
351.525(b)(4). However, Garware did not provide this type of detail for
their post-shipment loans so we calculated the subsidy rate for these
loans by dividing the total benefit by the value of Garware's total
exports during the POR. See 19 CFR 351.525(b). On this basis, we
preliminarily determine the countervailable subsidy from pre-shipment
export financing to be 0.16 percent ad valorem for Garware. We also
preliminarily determine the countervailable subsidy provided to Garware
from post-shipment export financing to be 0.02 percent ad valorem.
2. Advance License Program (ALP)
Under the ALP, exporters may import, duty free, specified
quantities of materials required to manufacture products that are
subsequently exported. The exporting companies, however, remain
contingently liable for the unpaid duties until they have fulfilled
their export requirement. The quantities of imported materials and
exported finished products are linked through standard input-output
norms (SIONs) established by the GOI. During the POR, both Garware and
MTZ used advance licenses to import certain materials duty free.
The Department previously found the 1997-2003 Export/Import
Guidelines underlying the ALP to be not countervailable. See PET Film
Final Determination, at ``Advance Licenses.'' However, in the 2003
administrative review, the Department examined the revised 2002-2007
Export/Import Policy Guidelines underlying the ALP and found the
program to be countervailable because the GOI does not have in place,
and does not apply, a system that is reasonable and effective for the
purposes intended, in accordance with 19 CFR 351.519(a)(4). See Final
Results of Countervailing Duty Administrative Review: Polyethylene
Terephthalate Film, Sheet, and Strip from India, 71 FR 7534 (February
13, 2006) (Second PET Film Review--Final Results), and accompanying
Issues and Decision Memorandum, at ``Advance License Program'' and
Comment 1 (Issues Memorandum--Second Review). In that review, the
Department found that the ALP confers a countervailable subsidy
because: (1) A financial contribution, as defined under section
771(5)(D)(ii) of the Act, is provided under the program, as the GOI
exempts the respondents from the payment of import duties; (2) the GOI
does not have in place and does not apply a system that is reasonable
and effective for the purposes intended in accordance with 19 CFR
351.519(a)(4), to confirm which inputs, and in what amounts, are
consumed in the production of the exported products; thus, the entire
amount of the import duty deferral or exemption earned by the
respondent constitutes a benefit under section 771(5)(E) of the Act;
and
[[Page 43611]]
(3) this program is contingent upon exportation and, therefore, is
specific under section 771(5A)(B) of the Act. See id.
The Department identified a number of systemic deficiencies that
led to its determination, specifically: (1) The lack of information
related to verification or implementation of penalties and the failure
to identify the number of companies during the POR that either did not
meet export commitments under the ALP, were penalized for not meeting
the export requirements under the ALP, or were penalized for claiming
excessive credits; (2) the availability of ALP benefits for a broad
category of ``deemed'' exports; and (3) the GOI's inability to provide
the SION calculations for the PET film industry or any documentation
demonstrating that the process outlined in its regulations was actually
applied in calculating the PET film SION. In the investigation of
Certain Lined Paper from India, the Department stated that it had
examined certain monitoring procedures with respect to the GOI's
tracking of inputs and exports through the Directorate General for
Foreign Trade (DGFT), and the tracking of inputs imported duty-free
under the ALP through a customs database. See Notice of Final
Affirmative Countervailing Duty Determination and Final Negative
Critical Circumstances Determination: Certain Lined Paper Products from
India, 71 FR 45034 (August 8, 2006), at Comment 10 (Lined Paper--Final
Determination). However, the Department ultimately determined that, in
spite of these procedures, systemic issues continued to exist that
demonstrate that the GOI lacks a system or procedure to confirm which
inputs are consumed in the production of the exported products and in
what amounts that is reasonable and effective for the purposes
intended, as required under 19 CFR 351.519. For example, while the
Department confirmed at verification that the GOI had recently updated
the SION for the lined paper industry, the GOI was unable to provide
source documents concerning the initial formation and subsequent
revision of the SION used for the lined paper industry, including the
SION in effect during the POI. The Department further stated that
neither the GOI nor the respondent claimed that the laws and procedures
underlying the ALP had changed with respect to the issue of ``deemed
exports'' during that investigation. Thus, the Department determined
that the respondent failed to provide information demonstrating that
the ALP was implemented and monitored effectively during the period of
investigation (POI), and continued to find that the GOI had not
demonstrated that it had carried out an examination of actual inputs
involved to confirm which inputs were consumed in the production of the
exported product, and in what amounts or that the ALP was reasonable
and effective for the purposes intended. See Lined Paper--Final
Determination, at Comment 10.
In this administrative review, the GOI indicated that it had
revised its Foreign Trade Policy and Handbook of Procedures for ALP
during the POR. Specifically, the GOI revisions, introduced May 13,
2005 and October 10, 2005, provided for a mechanism to review a SION
and monitor a company's consumption and stocks of duty-free, imported
or domestically procured, raw materials.
For instance, the GOI revised its Foreign Trade Policy and Handbook
of Procedures to update its consumption register on inputs imported and
inputs consumed to be filed by companies with the DGFT.\9\ Further, the
GOI noted that the Foreign Trade Policy and Handbook of Procedures, at
sections 4.22 and 4.28, provides guidelines for the granting of
extensions and levying of penalties.
---------------------------------------------------------------------------
\9\ The revision pertains to Appendix 23, which replaced the
previous version, Appendix 18 of the Foreign Trade Policy and
Handbook of Procedures. Appendix 23 states the consumption and stock
of inputs for each SION. It provides details of inputs, quantity
imported, name of the finished product produced, quantity of the
finished product, inputs actually consumed for the exported product,
excess imports, if any, and actual consumption. Producers/exporters
are required to file Appendix 23 with the DGFT at the beginning of
each year.
---------------------------------------------------------------------------
In addition, the GOI argued that Chapter 4, paragraph 4.10 of the
Foreign Trade and Policy Handbook provides for the review of SIONs.
Paragraph 4.10.2 of the Foreign Trade and Policy Handbook states that:
{a{time} t the beginning of the financial year or at any other time
as the {Norms Committee (NC){time} may find it necessary, the NC
may identify the SIONs which in its opinion are required to be
reviewed. The exporters are required to submit revised data in form
given in `Aayaat Niryaat Form' for such revisions. It is mandatory
for the industry/exporter(s) to provide the production and
consumption data etc. as may be required by DGFT/EPC for revision of
SION.
Furthermore, the GOI reported in this proceeding that it revised
the SION for PET film effective September 19, 2005. Exhibit S-12 of the
GOI's first supplemental response \10\ contains a ``Report on PET film
Sub committee,'' summarizing the old versus the new
``actual''consumption of inputs, as provided by two producers/exporters
of subject merchandise. The report indicates that for the first
producer/exporter, the DGFT inspected the manufacturing facilities.
Specifically, it states in Annexure I that the ``details of raw
materials actually consumed for manufacture of unit quantity of
resultant product was ascertained,'' and that the company maintains a
register of consumption and stock of imported raw material in
electronic form.
---------------------------------------------------------------------------
\10\ This exhibit was filed separately from the GOI's first
supplemental response (April 13, 2007) on April 16, 2007. Compare
GOI First Supplemental Response (April 13, 2007) with GOI First
Supplemental Response--Exhibit-12 (April 16, 2007).
---------------------------------------------------------------------------
The Department has analyzed the changes introduced by the GOI to
the ALP during 2005 and acknowledges certain improvements to the ALP
system. However, we find that systemic issues continued to exist in the
ALP system during the POR, all of which were enumerated in the Second
PET Film Review--Final Results and the Lined Paper--Final
Determination. For example, while the GOI pointed to provisions in the
Handbook of Procedures that lay out the procedures for the granting of
extensions and levying of penalties, the GOI did not demonstrate any
enforcement of these deadlines and actual application of the penalty
provisions. In addition, the GOI did not place any supporting
documentation on the record of this review that demonstrates
enforcement procedures for the DGFT and the Customs Authorities,
respectively, as addressed in the Issues Memorandum--Second Review.
Furthermore, while the GOI points to certain provisions that
provide for the review of SIONs, the GOI was not able to demonstrate
the existence of a legal or regulatory requirement or process required
for the NC to monitor the continued accuracy of the SION. Also, the GOI
did not provide a layout of the regulatory procedures regarding the
review of the SION or revision and selection of SIONs. See Issues
Memorandum--Second Review, at ``Advance License Program.'' Instead, the
GOI stated that the NC decides which SIONs are to be reviewed based on
the inputs received from various concerned government authorities.\11\
Thus, the GOI has not demonstrated that it has a process in place to
ensure that all SIONs are reviewed regularly and consistently as part
of the ALP monitoring system.
---------------------------------------------------------------------------
\11\ See GOI Response of April 13, 2007, at 9.
---------------------------------------------------------------------------
With regard to the specific SION for Pet Film, although the GOI
provided some information regarding verification of this SION, i.e.,
the quantity of raw materials consumed in the manufacture
[[Page 43612]]
of Pet Film by certain producers, they were not able to provide any
information on how this data was used to derive the revised SION. For
example, although we requested additional detail on how it arrived at
the revised SION, the GOI did not provide us with any additional
information, such as the supporting documentation, demonstrating how
the total purchases of inputs, imported and procured domestically, by
quantity and value, tie into consumption and total production quantity
of subject merchandise. Despite repeated requests by the Department for
more detailed information and explanations concerning the process for
developing the revised SION for PET film, the GOI did not place
pertinent information on the record, e.g., an accounting for all
inputs, by-products, and waste, and the supporting documentation for
the revised SION.\12\ The documentation provided by the GOI indicates
that there are three processes by which subject merchandise can be
produced.\13\ However, the documentation lacks any description of the
processes, and it does not include any calculations demonstrating how
the revised SION for the production processes was determined.
---------------------------------------------------------------------------
\12\ See GOI Response of January 5, 2007, at II-51-56; GOI First
Supplemental Response of April 13, 2007, at 9-11; and GOI Second
Supplemental Response of June 25, 2007, at 8.
\13 \ GOI First Supplemental Response--Exhibit-12, at 5.
---------------------------------------------------------------------------
In addition, the GOI's revisions to the ALP did not address the
Department's concerns with respect to deemed exports. In the Second PET
Film Review--Final Results, the Department found that these deemed
export sales were not linked to the actual exportation of the subject
merchandise, and provide for government discretion to bestow benefits
under the program even more broadly. See Issues Memorandum--Second
Review, at ``Advance License Program.'' The GOI has not provided the
Department with any of its procedures that would confirm that all
deemed exports are exported.\14\
---------------------------------------------------------------------------
\14\ See GOI Third Supplemental Response of June 25, 2007, at
11-12.
---------------------------------------------------------------------------
Therefore, despite the changes to the ALP noted by the GOI, the
Department finds that systemic problems continue to exist, and
consequently we find that the GOI lacks a system or procedure to
confirm which inputs are consumed in the production of the exported
products and in what amounts that is reasonable and effective for the
purposes intended, as required under 19 CFR 351.519.
Pursuant to 19 CFR 351.524(c), the exemption of import duties on
inputs consumed in production of an exported product normally provides
a recurring benefit. Under this program, for 2005, Garware and MTZ did
not have to pay certain import duties for inputs that were used in the
production of subject merchandise. Thus, we treated the benefit
provided under the ALP as a recurring benefit. To calculate the
subsidy, we first determined the total value of duties exempted during
the POR, including an amount for the Customs Education Cess duty, for
each company. From this amount, we subtracted the required application
fees paid for each license during the POR as an allowable offset in
accordance with section 771(6) of the Act. We then divided the
resulting net benefit by the appropriate value of export sales.
Consistent with our calculations in the final results of the last
administrative review,\15\ ``deemed export'' sales should be included
in the export sales denominator for the ALP program only when the
Respondents applied for and were bestowed licenses during the POR based
on both physical exports and deemed exports. However, both Garware and
MTZ stated that their ALP licences were granted on physical exports,
only; therefore, we have only used physical export sales in the
denominator.\16\ On this basis, we preliminarily determine the
countervailable subsidy provided under the ALP to be 0.11 for Garware
and 0.21 percent ad valorem for MTZ.
---------------------------------------------------------------------------
\15\ See Polyethylene Terephthalate Film, Sheet, and Strip from
India: Final Results of Countervailing Duty Administrative Review,
72 FR 6530 (February 12, 2007) (Third PET Film Review--Final
Results), and accompanying Issues and Decision Memorandum, at
Comment 1 (Issues Memorandum--Third Review).
\16\ See Garware's and MTZ's second supplemental response of
July 2, 2007 and July 6, 2007, respectively.
---------------------------------------------------------------------------
3. Export Promotion Capital Goods Scheme (EPCGS)
The EPCGS provides for a reduction or exemption of customs duties
and excise taxes on imports of capital goods used in the production of
exported products. Under this program, producers pay reduced duty rates
on imported capital equipment by committing to earn convertible foreign
currency equal to four to five times the value of the capital goods
within a period of eight years. Once a company has met its export
obligation, the GOI will formally waive the duties on the imported
goods. If a company fails to meet the export obligation, the 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 the investigation, the Department determined that import duty
reductions provided under the EPCGS are a countervailable export
subsidy because the scheme: (1) Provides a financial contribution
pursuant to section 771(5)(D)(ii) in the form of revenue forgone for
not collecting import duties; (2) respondents benefit under section
771(5)(E) of the Act in two ways by participating in this program; and
(3) the program is contingent upon export performance, and is specific
under section 771(A)(B) of the Act. See PET Film Final Determination--
Decision Memorandum, at ``EPCGS.'' There is no new information or
evidence of changed circumstances that would warrant reconsidering our
determination that this program is countervailable. Therefore, for
these preliminary results, we continue to find this program
countervailable.
The first benefit is the amount of unpaid import duties that would
have to be paid to the GOI if accompanying export obligations are not
met. The repayment of this liability is contingent on subsequent
events, and in such instances, it is the Department's practice to treat
any balance on an unpaid liability as an interest-free loan. Id. The
second benefit is the waiver of duty on imports of capital equipment
covered by those EPCGS licenses for which the export requirement has
already been met. For those licenses for which companies demonstrate
that they have completed their export obligations, we treat the import
duty savings as grants received in the year in which the GOI waived the
contingent liability on the import exemption.
Import duty exemptions under this program are provided for the
purchase of capital equipment. The preamble to our regulations states
that if a government provides an import duty exemption tied to major
equipment purchases, ``it may be reasonable to conclude that, because
these duty exemptions are tied to capital assets, the benefits from
such duty exemptions should be considered non-recurring * * * '' See
Countervailing Duties; Final Rule, 63 FR 65348, 65393 (November 25,
1998). In accordance with 19 CFR 351.524(c)(2)(iii), we are treating
these exemptions as non-recurring benefits.
Garware and MTZ reported that they imported capital goods under the
EPCGS in years prior to the POR. As stated above, we preliminarily
determine that cross-ownership between Garware and Garware Chemicals
continues to exist. See ``Cross-Ownership and Attribution of
Subsidies'' Section. Garware reported in
[[Page 43613]]
its second supplemental response of July 2, 2007 that Garware Chemical,
an affiliated supplier of DMT, participated in this program; however,
Garware did not provide information on Garware Chemical's imports of
capital goods under the EPCGS, nor any of its affiliate's export
information. The information on the record of this review consists of
Garware Chemical's application of the license, license and amendments
thereof. We are not able to discern from the information on the record,
the benefits provided to Garware Chemical under EPCGS. We will pursue
clarifying information for purposes of the final results of review.
Therefore, for purposes of these preliminary results, we have only used
information provided by Garware and MTZ in the subsidy calculations.
According to the information provided in their responses, Garware
and MTZ received various EPCGS licenses, which were for equipment
involved in the production of both subject merchandise and non-subject
merchandise. Further, we note that neither Garware nor MTZ have
demonstrated that their respective EPCGS licenses are tied to the
production of a particular product within the meaning of 19 CFR
351.525(b)(5). As such, we find that each company's respective EPCGS
licenses benefit all of the company's exports.
Garware and MTZ met the export requirements for certain EPCGS
licenses prior to December 31, 2005 and the GOI formally waived the
relevant import duties prior to December 31, 2005. For other licenses,
however, Garware and MTZ have not yet met their export obligation as
required under the program. Therefore, although Garware and MTZ have
received a deferral from paying import duties when the capital goods
were imported, the final waiver on the obligation to pay the duties has
not yet been granted for many of these imports.
For both Garware's and MTZ's imports for which the GOI has formally
waived the duties, we treat the full amount of the waived duty as a
grant received in the year in which the GOI officially granted the
waiver. To calculate the benefit received from the GOI's formal waiver
of import duties on Garware's and MTZ's capital equipment imports prior
to December 31, 2005, we considered the total amount of duties waived
(net of any required application fees paid) to be the benefit. See
section 771(6) of the Act. Further, consistent with the approach
followed in the investigation, we determine the year of receipt of the
benefit to be the year in which the GOI formally waived Garware's and
MTZ's outstanding import duties. See PET Film Final Determination-
Decision Memorandum, at Comment 5. Next, we performed the ``0.5 percent
test,'' as prescribed under 19 CFR 351.524(b)(2), for each year in
which the GOI granted Garware and MTZ an import duty waiver. Those
waivers with values in excess of 0.5 percent of Garware's and MTZ's
total export sales in the year in which the waivers were granted were
allocated using Garware's and MTZ's company-specific AUL or the AUL as
prescribed by the IRS table, respectively, while waivers with values
less than 0.5 percent of Garware's and MTZ's total export sales were
allocated to the year of receipt. See ``Allocation Period'' section,
above.
As noted above, import duty reductions that Garware and MTZ
received on the imports of capital equipment for which they have not
yet met export obligations may have to be repaid to the GOI if the
obligations under the licenses are not met. Consistent with our
practice and prior determinations, we will treat the unpaid import duty
liability as an interest-free loan. See 19 CFR 351.505(d)(1); and e.g.,
Final Affirmative Countervailing Duty Determination: Bottle-Grade
Polyethylene Terephthalate (PET) Resin From India, 70 FR 13460 (March
21, 2005), and accompanying Issues and Decision Memorandum, at
``EPCGS,'' (Final--Indian PET Resin).
The amount of the unpaid duty liabilities to be treated as an
interest-free loan is the amount of the import duty reduction or
exemption for which the respondent applied, but, as of the end of the
POR, had not been formally waived by the GOI. Accordingly, we find the
benefit to be the interest that Garware and MTZ would have paid during
the POR had they borrowed the full amount of the duty reduction or
exemption at the time of importation. See, e.g., Second PET Film
Review--Preliminary Results, 70 FR at 46488 (unchanged in the final
results); see also Final--Indian PET Resin, at ``EPCGS.''
As stated above, under the EPCGS program, the time period for
fulfilling the export commitment expires eight years after importation
of the capital good. Consequently, the date of expiration of the time
period to fulfill the export commitment occurs at a point in time more
than one year after the date of importation of the capital goods.
Pursuant to 19 CFR 351.505(d)(1), the benchmark for measuring the
benefit is a long-term interest rate because the event upon which
repayment of the duties depends (i.e., the date of expiration of the
time period to fulfill the export commitment) occurs at a point in time
that is more than one year after the date of importation of the capital
goods. As the benchmark interest rate, we used the weighted-average
interest rate from all comparable commercial, long-term, rupee-
denominated loans for the year in which the capital good was imported.
See the ``Benchmarks Interest Rates and Discount Rates'' section above.
The benefit received under the EPCGS is the total amount of: (1)
The benefit attributable to the POR from the grant of formally waived
duties for imports of capital equipment for which respondents met
export requirements by December 31, 2005, and/or (2) interest that
should have been paid on the contingent liability loans for imports of
capital equipment that have not met export requirements. To calculate
the benefit from the formally waived duties for imports of capital
equipment which met export requirements for Garware and MTZ, we took
the total amount of the waived duties in each year and treated each
year's waived amount as a non-recurring grant. We applied the grant
methodology set forth in 19 CFR 351.524(d), using the discount rates
discussed in the ``Benchmark Interest Rates and Discount Rates''
section above to determine the benefit amounts attributable to the POR.
To calculate the benefit from the contingent liability loans for
both Garware and MTZ, we multiplied the total amount of unpaid duties
under each license, including an amount for Customs Education Cess
duty, by the long-term benchmark interest rate for the year in which
the license was approved. We then summed these two amounts to determine
the total benefit for each company. We then divided the benefit under
the EPCGS by each company's total exports to determine a subsidy of
3.17 percent ad valorem for Garware and 20.77 percent ad valorem for
MTZ.
4. Duty Entitlement Passbook Scheme (DEPS/DEPB)
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 GOI has established a
SION for the exported product. DEPS credits can be used for any
subsequent imports, regardless of whether they are consumed in the
production of an exported product. DEPS credits are
[[Page 43614]]
valid for twelve months and are transferable after the foreign exchange
is realized from the export sales on which the DEPS credits are earned.
The Department has previously determined that the DEPS program is
countervailable. See, e.g., PET Film Final Determination--Decision
Memorandum, at ``DEPS.'' In the investigation, the Department
determined that under the DEPS, a financial contribution, as defined
under section 771(5)(D)(ii) of the Act, is provided because (1) The GOI
provides credits for the future payment of import duties; and (2), the
GOI does not have in place and does not apply a system that is
reasonable and effective for the purposes intended to confirm which
inputs, and in what amounts, are consumed in the production of the
exported products. Id. Therefore, under 19 CFR 351.519(a)(4) and
section 771(5)(E) of the Act, the entire amount of import duty
exemption earned during the POI constitutes a benefit. Finally, this
program can only be used by exporters and, therefore, it is specific
under section 771(5A)(B) of the Act. Id. No new information or evidence
of changed circumstances has been presented in this review to warrant
reconsideration of this finding. Therefore, we continue to find that
the DEPS is countervailable.
In accordance with past practice and pursuant to 19 CFR
351.519(b)(2), we find that benefits from the DEPS are conferred as of
the date of exportation of the shipment for which the pertinent DEPS
credits are earned. We calculated the benefit on an ``as-earned'' basis
upon export because the DEPS credits are provided as a percentage of
the value of the exported merchandise on a shipment-by-shipment basis
and, as such, it is at this point that recipients know the exact amount
of the benefit (e.g., the duty exemption). See e.g., Final Affirmative
Countervailing Duty Determination: Certain Cut-to-Length Carbon-Quality
Steel Plate From India, 64 FR 73131, 73134 (December 29, 1999) (Carbon
Steel Plate From India) and accompanying Issues and Decision Memorandum
(Carbon Steel Plate From India--I&D Memo). Benefits from the DEPS
program are conferred as of the date of exportation of the shipment for
which the pertinent DEPS credits are earned. See Carbon Steel Plate
From India--I&D Memo, at Comment 4.
Both Garware and MTZ reported that they received post-export
credits on PET film under the DEPS program during the POR. Because DEPS
credits are earned on a shipment-by-shipment basis, we normally
calculate the subsidy rate by dividing the benefit earned on subject
merchandise exported to the United States by total exports of subject
merchandise to the United States during the POR. See e.g., Carbon Steel
Plate From India at 73134. However, the sample licences provided by
both Garware and MTZ did not indicate whether the benefit was earned on
subject merchandise.\17\ Therefore, we calculated the DEPS program rate
using the value of the post-export credits that Garware and MTZ earned
for their export shipments during the POR and subtracted as an
allowable offset the actual amount of required application fees paid
for each license in accordance with section 771(6) of the Act. We
divided this amount by Garware's and MTZ's total exports of subject
merchandise during the POR. On this basis, we preliminarily determine
Garware's and MTZ's countervailable subsidy from the DEPS program to be
5.80 percent ad valorem and 5.35 percent ad valorem, respectively.
---------------------------------------------------------------------------
\17\ See Garware's Original Response, at Exhibit 8 (January 5,
2007), and MTZ's First Supplemental Response, at Exhibit S-11 (April
18, 2007). Garware confirmed in its second supplemental response
that its DEPS licenses are not product specific. Garware's Second
Supplemental Response, at 5 (July 2, 2007).
---------------------------------------------------------------------------
5. State Sales Tax Incentive Programs
In the previous countervailing duty administrative review, the
Department determined that various state governments in India grant
exemptions to, or deferrals from, sales taxes in order to encourage
regional development. See Issues Memorandum--Third Review, at ``State
Sales Tax Incentive Programs.'' These incentives allow privately-owned
(i.e., not 100 percent owned by the GOI) manufacturers, that are in
selected industries and located in the designated regions, to sell
goods without charging or collecting state sales taxes. As a result of
these programs, the respondents did not pay sales taxes on their
purchases from suppliers located in certain states. During the POR,
Garware and its affiliated supplier, Garware Chemicals,\18\ and MTZ did
not pay sales taxes on certain purchases made from the states of
Maharashtra (SOM) and Gujurat. In the investigation of this
countervailing duty order, we determined that the operation of these
types of state sales tax programs confers a countervailable subsidy.
See PET Film Final Determination--Decision Memorandum, at ``State of
Maharashtra Programs, Sales Tax Incentives.'' The financial
contribution is the tax revenue foregone by the respective state
governments pursuant to section 771(5)(D)(ii) of the Act, and the
benefit equals the amount of sales taxes not paid by Garware and
Garware Chemicals, and MTZ pursuant to section 771(5)(E) of the Act.
Pursuant to section 771(5A)(D)(iv) of the Act, these programs are de
jure specific because they are limited to certain geographical regions
within the respective states administering the programs. There is no
new information or evidence of changed circumstances that would warrant
reconsidering this finding. Therefore, for these preliminary results,
we continue to find these programs countervailable. Further, as stated
above, we preliminarily determine that cross-ownership between Garware
and Garware Chemicals continues to exist. Accordingly, we attribute the
subsidies received by Garware Chemicals to Garware in our preliminary
results, pursuant to 19 CFR 351.525(b)(6)(iv) and (vi).
---------------------------------------------------------------------------
\18\ See ``Cross-Ownership and Attribution of Subsidies''
section above.
---------------------------------------------------------------------------
MTZ stated in its April 13, 2007 supplemental response that it
purchased inputs from a company based in a ``Union Territory'' for
which the company did not pay a sales tax. MTZ stated in its July 6,
2007 supplemental response that this exemption should not be treated as
part of the State Sales Tax Incentive program; however, based on the
information provided and from the previous review, the Department is
treating this sales tax exemption as part of the State Sales Tax
Incentive program preliminarily and will calculate MTZ's subsidy rate
for this program accordingly. See Polyethylene Terephthalate Film,
Sheet, and Strip from India: Preliminary Results of Countervailing Duty
Administrative Review, 71 FR 45037 (August 8, 2006) (unchanged in the
final results). However, we intend to further examine this issue for
the final results.
Garware reported in its second supplemental response of July 2,
2007 that Garware Chemical participated in this program. Garware
provided information regarding Garware Chemical's benefits under this
program, however; Garware did not provide any sales information for
Garware Chemical. This information is required in order to attribute
Garware Chemical's subsidy to Garware. See ``Cross-Ownership and
Attribution of Subsidies'' section above. To calculate the benefit for
MTZ, we first calculated the total amount of state sales taxes
respondent would have paid on its purchases during the POR absent these
programs. We then divided this amount by MTZ's total sales during the
POR. On this basis, we preliminarily determine the subsidy rate under
this program to be 0.96 percent ad valorem
[[Page 43615]]
for Garware and 7.39 percent ad valorem for MTZ.
6. State of Maharashtra (SOM) Capital Incentive Scheme
In the investigation, the Department determined that Garware
received grants under this program through the SOM 1988 package scheme
of incentives. See PET Film Final Determination, at ``State of
Maharashtra Programs: 3. Capital Incentive Scheme.'' The benefits of
this program, grants of up to 3,000,000 rupees, are available to
certain privately-owned (i.e., not one hundred percent owned by the
GOI) industries that make capital investments in specific regions of
Maharashtra.
The Department also found that the SOM Capital Incentive Scheme
provided a financial contribution under section 771(5)(D)(i) of the Act
in the form of a grant, and Garware benefitted under section 771(5)(E)
of the Act, in the amount of the capital incentive grants received by
Garware from the SOM. The Department also found this program to be
specific within the meaning of sections 771(5A)(D)(i) and (iv) of the
Act because the benefits of this program are limited to certain
privately-owned (i.e., not one hundred percent owned by the GOI)
industries located within designated geographical regions.
Under 19 CFR 351.524(c), the Department treats the grants provided
by this program as non-recurring subsidies. In the investigation, to
determine the subsidy for this program, the Department first performed
the ``0.5 percent test,'' as prescribed under 19 CFR 351.524(b)(2), for
the year in which the SOM approved Garware's grants. Because the grants
did not exceed 0.5 percent of Garware's total sales in that year, the
Department allocated the total amount of the grants to the year in
which the grants were received.
In the current review, Garware reported receiving a capital subsidy
in 1998. Based on the information provided by Garware, we are unable to
confirm that this capital subsidy was the same capital subsidy examined
in the investigation.\19\ Furthermore, we do not have the information
necessary to perform the 0.5 percent test for the year in which the
grant was received. Therefore, as facts available, we performed the 0.5
percent test based on sales information from the investigation. See
Memorandum to The File From Elfi Blum and Toni Page, Case Analysts:
Placing the Calculations from the Final Determination on the Record of
this Review, dated July 31, 2007, and on file in the Central Record
Unit, Room B-099 of the Main Commerce Building (CRU). Because this
grant did not exceed 0.5 percent of Garware's total sales, the entire
amount of the grant is attributable to the year in which it was
received (i.e., 1998). As such, we preliminarily determine that there
is no countervailable benefit from this program allocable to the POR.
---------------------------------------------------------------------------
\19\ In response to a request by the Department, Garware stated
in its first supplemental response of April 13, 2007, that Garware
received capital subsidies in 1998. Exhibit S-5B indicates that it
was a ``Disbursement of Special Capital Incentive under the 1988
Package Scheme of Incentives.'' Garware has not yet provided any
additional information on this capital subsidy.
---------------------------------------------------------------------------
7. State of Maharashtra (SOM) Electricity Duty Exemption
This state incentive program provides an exemption from the payment
of tax on electricity charges. This program is available to
manufacturers located in certain regions of Maharashtra. Garware
reported that it and its affiliated supplier, Garware Chemicals, Ltd.,
received an exemption from the payment of tax on electricity charges
through this program. In the investigation, we determined that the
electricity duty exemption scheme at issue is separate from the refund
of electricity duty scheme under the 1993 SOM package scheme of
incentives. See PET Film Final Determination, at ``Electricity Duty
Exemption Scheme.''
In the investigation, the Department determined that the
electricity duty scheme is countervailable because: (1) SOM has forgone
or not collected revenue otherwise due, the tax exemption provided
through this program constitutes a financial contribution within the
meaning of section 771(5)(D)(ii) of the Act; (2) the benefit consists
of the amount of tax exempted on electricity charges through this
program during the POI, pursuant to section 771(5)(E) of the Act; and
(3) this program is specific within the meaning of section
771(5A)(D)(iv) of the Act because the benefits of this program are
limited to industries located within designated geographical regions
within the SOM. There is no new information or evidence of changed
circumstances that would warrant reconsidering this finding. Therefore,
for these preliminary results, we continue to find this program
countervailable.
Further, we preliminarily determine that cross-ownership continues
to exist between Garware and Garware Chemical. See ``Cross-Ownership
and Attribution of Subsidies'' section above. Accordingly, we attribute
the subsidies received by Garware Chemicals to Garware in our
preliminary results, pursuant to 19 CFR 351.525(b)(6)(iv) and (vi).
Garware reported in its second supplemental response of July 2, 2007
that Garware Chemical participated in this program. Garware provided
information regarding Garware Chemical's benefit under this program;
however, Garware did not provide any sales information of Garware
Chemical on the record. This information is required in order to
attribute Garware Chemical's subsidy to Garware. See ``Cross-Ownership
and Attribution of Subsidies'' section above. On this basis, we
preliminarily determine the subsidy rate under this program to be 0.13
percent ad valorem for Garware.
Programs Preliminarily Determined To Be Not Used
We preliminarily determine that the producers/exporters of PET film
products did not apply for or receive benefits during the POR under the
programs listed below:
1. Duty Free Replenishment Certificate (DFRC).
2. Export Oriented Units (EOU).
3. Octroi Refund Scheme--State of Maharashtra.\20\
---------------------------------------------------------------------------
\20\ Garware stated in its original response of January 5, 2007,
at 57, that it applied for the program but had not yet received any
benefit during the POR.
---------------------------------------------------------------------------
Preliminary Results of Administrative Review
In accordance with 19 CFR 351.221(b)(4)(i), we have calculated
individual subsidy rates for Garware and MTZ for the POR. We
preliminarily determine the total countervailable subsidy to be 10.35
percent ad valorem for Garware and 33.72 percent ad valorem for MTZ.
If the final results of this review remain the same as these
preliminary results, the Department intends to issue assessment
instructions to U.S. Customs and Border Protection (CBP) 15 days after
the date of publication of the final results of review.
We will instruct CBP to collect cash deposits for Garware and MTZ
at the rates indicated above. We will instruct CBP to continue to
collect cash deposit rates for non-reviewed companies at the most
recent rate applicable to the company.
Public Comment
Pursuant to 19 CFR 351.224(b), the Department will disclose to any
party to the proceeding the calculations performed in connection with
these preliminary results within five days after the date of public
announcement of this notice. Pursuant to 19 CFR 351.309, interested
parties may submit written comments in response to these
[[Page 43616]]
preliminary results. Unless extended by the Department, case briefs are
to be submitted within 30 days after the date of publication of this
notice. Rebuttal briefs, limited to arguments raised in case briefs,
may be submitted no later than five days after the time limit for
filing case briefs. Parties who submit arguments in this proceeding are
requested to submit with the argument: (1) A statement of the issues;
(2) a brief summary of the argument; and (3) a table of authorities.
See 19 CFR 351.309(c)(2). Case and rebuttal briefs must be served on
interested parties in accordance with 19 CFR 351.303(f).
Also, pursuant to 19 CFR 351.310(c), interested parties who wish to
request a hearing or to participate if one is requested must submit a
written request to the Assistant Secretary for Import Administration
within 30 days of the publication of this notice. Requests should
contain (1) The party's name, address and telephone number; (2) the
number of participants; and, (3) a list of issues to be raised. Issues
raised in the hearing will be limited to those raised in the respective
case briefs. Unless the Secretary specifies otherwise, the hearing, if
requested, will be held two days after the date for submission of
rebuttal briefs. Parties will be notified of the time and location.
The Department will publish the final results of this
administrative review, including the results of its analysis of issues
raised in any case brief, rebuttal brief, or hearing no later than 120
days after publication of these preliminary results, unless extended.
See 751(a)(3)(A) of the Act and 19 CFR 351.213(h).
These preliminary results are issued and published in accordance
with sections 751(a)(1) and 777(i)(1) of the Act, and 19 CFR
351.221(b)(4).
Dated: July 31, 2007.
Stephen J. Claeys,
Acting Assistant Secretary for Import Administration.
[FR Doc. E7-15215 Filed 8-3-07; 8:45 am]
BILLING CODE 3510-DS-P