Final Affirmative Countervailing Duty Determination: Bottle-Grade Polyethylene Terephthalate (PET) Resin From India

AGENCY:

Import Administration, International Trade Administration, Department of Commerce.

SUMMARY:

The Department of Commerce (the Department) has reached a final determination that countervailable subsidies are being provided to producers and exporters of Bottle-Grade (BG) Polyethylene Terephthalate (PET) Resin from India. For information on the estimated countervailable subsidy rates, please see the “Final Determination” section of this notice.

EFFECTIVE DATE:

March 21, 2005.

FOR FURTHER INFORMATION CONTACT:

Douglas Kirby or Addilyn Chams-Eddine, AD/CVD Operations, Office 6, Import Administration, U.S. Department of Commerce, Room 7866, 14th Street and Constitution Avenue, NW., Washington, DC 20230; telephone: (202) 482-3782 or (202) 482-0648, respectively.

SUPPLEMENTARY INFORMATION:

Case History

On August 30, 2004 the Department published the Notice of Preliminary Affirmative Countervailing Duty Determination and Alignment with Final Antidumping Duty Determination: Bottle-Grade Polyethylene Terephthalate (PET) Resin from India, 69 FR 52866 (August 30, 2004) (Preliminary Determination). Since the issuance of the Preliminary Determination, the following events have occurred. Between September 9 and November 17, 2004, the Department issued supplemental questionnaires to each of the respondent parties and all parties submitted timely responses to the questionnaires. On September 29, 2004, the United States PET Resin Producers Coalition (Petitioner) requested a hearing pursuant to 19 CFR 351.310(c) and the Department's Preliminary Determination.

From December 2 through December 17, 2004, the Department conducted verification of the questionnaire responses provided by the Government of India (GOI) and the four respondent parties: Reliance Industries, Ltd. (Reliance), Futura Polyesters, Ltd. (Futura), South Asia Pertrochem Ltd. (SAPL), and Elque Polyesters Ltd. (Elque). The Department issued the GOI and the Reliance Industries Ltd. (Reliance) verification reports on January 25, 2005. See Memoranda to the File, Countervailing Duty Investigation of Polyethylene Terephthalate (PET) Resin from India: Verification of the Government of India's (GOI) Questionnaire Responses (GOI Verification Report); and Countervailing Duty Investigation of Polyethylene Terephthalate (PET) Resin from India: Verification of Reliance Industries Ltd. (Reliance Verification Report). The Department issued the Elque, Futura, and SAPL verification reports on January 26, 2004. See Memoranda to the File, Countervailing Duty Investigation of PET Resin from India: Verification of Elque Ltd. (Elque Verification Report); Countervailing Duty Investigation of Polyethylene Terephthalate (PET) Resin from India: Verification of Futura Polyesters Ltd. (Futura Verification Report); and Countervailing Duty Investigation of PET Resin from India: Verification of South Asia Petrochem Ltd. (SAPL Verification Report). In addition, on February 14, 2005, the Department issued a memorandum containing our preliminary analysis of the Export Oriented Unit (EOU) programs which we had noted in the Preliminary Determination were programs for which additional information was needed. See Memoranda to the File from Sean Carey, Acting Program Manager, through Dana S. Mermelstein, Acting Director, AD/CVD Operations, Office 6, to Barbara E. Tillman, Acting Deputy Assistant Secretary, for Import Administration, Countervailing Duty Investigation of Polyethylene Terephthalate (PET) Resin from India: Preliminary Analysis of the Export Oriented Unit (EOU) Program on Duty Drawback on Furnace Oil Procured from Domestic Oil Companies Program and Purchases of Materials and Other Inputs Free of Central Excise Duty (EOU Program Memorandum).

On February 4, 2005, case briefs were filed by the Petitioner, the GOI, Reliance, and SAPL. On February 9, 2005, the Petitioner, Reliance, and SAPL filed rebuttal briefs. Neither Futura nor Elque filed case or rebuttal briefs. On February 11, 2005, the Petitioner withdrew its request for a hearing.

The Department also allowed parties a separate opportunity to file comments and rebuttal comments on our EOU Program Memorandum. On February 17, 2005, such comments were filed by the Petitioner, the GOI, Reliance and SAPL. On February 22, 2005, the Petitioner submitted rebuttal comments. Also, on February 17, 2005, Reliance requested that the Department proceed with a hearing. On February 18, and February 22, 2005, the Petitioner requested that the Department reject Reliance's request for a hearing as untimely. The Department concurred with the Petitioner that under section 351.310 of the Department's regulations, the request for a hearing was untimely. See Memorandum to the File from Douglas M. Kirby, Case Analyst, Office 6, Import Administration, to Dana S. Mermelstein, Acting Director, AD/CVD Operations, Office 6, Countervailing Duty Investigation: Polyethylene Terephthalate (PET) Resin from India; Response to the February 17, 2005 Submission of Reliance Industries Limited (Reliance), dated February 24, 2005.

Period of Investigation

The period of investigation (POI) for which we are measuring subsidies is April 1, 2003, through March 31, 2004, which corresponds to the most recently completed fiscal year for all of the respondent companies. See section 351.204(b)(2) of the Department's regulations.

Scope of the Investigation

The merchandise covered by this investigation is polyethylene terephthalate (PET) bottle-grade resin, defined as having an intrinsic viscosity of at least .68 deciliters per gram but not more than .86 deciliters per gram. The scope includes bottle-grade PET resin that contains various additives introduced in the manufacturing process. The scope does not include post-consumer recycle (PCR) or post-industrial recycle (PIR) PET resin; however, included in the scope is any bottle-grade PET resin blend of virgin PET bottle-grade resin and recycled PET (RPET). Waste and scrap PET are outside the scope of the investigation. Fiber-grade PET resin, which has an intrinsic viscosity of less than .68 deciliters per gram, is also outside the scope of the investigation.

The merchandise subject to this investigation is properly classified under subheading 3907.60.0010 of the Harmonized Tariff Schedule of the United States (HTSUS); however, merchandise classified under HTSUS subheading 3907.60.0050 that otherwise meets the written description of the scope is also subject to these investigations. Although the HTSUS subheadings are provided for convenience and customs purposes, the written description of the merchandise under investigation is dispositive.

Analysis of Comments Received

All issues raised by the interested parties in their case and rebuttal briefs, as well as their comments on our EOU Program Memorandum are addressed in the “Issues and Decision Memorandum” (Decision Memorandum), dated March 14, 2005, which is hereby adopted by this notice. A list of the issues which parties have raised is attached to this notice as Appendix I. Parties can find a complete discussion of all issues raised in this investigation and the corresponding recommendations in this public memorandum, which is on file in the Central Records Unit (CRU) at Room B099 of the main Commerce building. A complete version of the Decision Memorandum is available at http://www.ia.ita.doc.gov under the heading “Federal Register Notices.” The paper copy and the electronic version of the Decision Memorandum are identical in content.

Final Determination

In accordance with section 705(c)(1)(B)(i) of the Act, we have determined individual rates for Reliance, SAPL, Futura, and Elque. To calculate the “all others” rate, we weight-averaged the individual company rates by each company's respective sales of subject merchandise made to the United States during the POI. These rates are summarized in the table below:

Suspension of Liquidation

In accordance with our preliminary affirmative determination, we instructed U.S. Customs and Border Protection (CBP) to suspend liquidation of all entries of PET Resin from India, which were entered or withdrawn from warehouse, for consumption on or after August 30, 2004, the date of the publication of our Preliminary Determination in the Federal Register. In accordance with section 703(d) of the Act, we instructed CBP to discontinue the suspension of liquidation for merchandise entered on or after December 28, 2004, but to continue the suspension of liquidation of entries made between August 30, 2004, through December 27, 2004.

If the International Trade Commission (ITC) issues a final affirmative injury determination, we will issue a countervailing duty order, reinstate suspension of liquidation under section 706(a) of the Act for all entries, and require a cash deposit of estimated countervailing duties for such entries of merchandise at the rates indicated above. If the ITC determines that material injury, or threat of material injury, does not exist, this proceeding will be terminated and all estimated duties deposited or securities posted as a result of the suspension of liquidation will be refunded or canceled.

ITC Notification

In accordance with section 705(d) of the Act, we will notify the ITC of our determination. In addition, we are making available to the ITC all non-privileged and non-proprietary information related to this investigation. We will allow the ITC access to all privileged and business proprietary information in our files, provided that the ITC confirms that it will not disclose such information, either publicly or under an administrative protective order (APO), without the written consent of the Assistant Secretary for Import Administration.

Return or Destruction of Proprietary Information

In the event that the ITC issues a final negative injury determination, this notice will serve as the only reminder to parties subject to APO of their responsibility concerning the destruction of proprietary information disclosed under APO in accordance with 19 CFR 351.305(a)(3). Failure to comply is a violation of the APO.

This determination is issued and published pursuant to sections 705(d) and 777(i) of the Act.

Appendix I: Issues and Decision Memorandum

I. List of Comments

Comment 1: Futura's Debonding and Adjustment to Duty Free Exemptions

Comment 2: Futura's Central Sales Tax Reimbursement

Comment 3: WBIDC Investment in SAPL

Comment 4: DEPS Credit Offset

Comment 5: EOU Exemptions on Raw Materials

Comment 6: Program-Wide Change of DEPS Rate

Comment 7: Numerator and Denominator for the EPCGS Subsidy Calculation

Comment 8: Benchmark Interest Rates for EPCGS

Comment 9: EPCGS Benefits Received in the POI

Comment 10: Allocation of EPCGS Benefits and 0.5 Percent Test

Comment 11: Reliance's Loan Benchmarks for State of Maharashtra (SOM) and State of Gujarat (SOG) Sales Tax Incentive Programs

Comment 12: Average Useful Life (AUL) for SAPL's Assets

Comment 13: Effective Interest Rate of SAPL's Pre-Shipment Export Loans

Comment 14: Treatment of Exemptions on Imported Capital Goods

Comment 15: SAPL's Cash Deposit Rate

Comment 16: Central Sales Tax Reimbursements on Raw Materials

Comment 17: EOU Duty Drawback on Furnace Oil

II. Subsidies Valuation Information

A. Loan Benchmarks

B. Allocation Period

C. Trading Company Subsidies

III. Analysis of Programs

A. Programs Determined To Confer Subsidies

1. GOI Programs

a. Pre- and Post-Shipment Export Financing

b. Duty Entitlement Passbook Scheme (DEPS)

c. Income Tax Exemption Scheme, Section 80 HHC

d. Export Promotion Capital Goods Scheme (EPCGS)

e. Export Oriented Units (EOUs) Program: Duty Drawback on Furnace Oil Procured From Domestic Oil Companies

f. Export Oriented Units (EOUs) Program: Duty-Free Import of Capital Goods and Raw Materials

g. Export Oriented Units (EOUs) Program: Reimbursement of Central Sales Tax (CST) Paid on Materials Procured Domestically

2. State Programs

a. State of Gujurat (SOG) Program: Sales Tax Incentive Scheme

b. State of Maharashtra (SOM) Program: Sales Tax Incentive Scheme

c. State of West Bengal (SWB) Sales Tax Incentive Scheme

B. GOI Program Determined To Be Not Countervailable

Export Oriented Units (EOUs) Programs: Purchase of Material and Other Inputs Free of Central Excise Duty

C. Programs Determined To Be Not Used

GOI Programs

a. Status Certificate Program

b. Market Development Assistance

c. Income Tax Exemption Scheme (Sections 10A and 10B)

d. Loan Guarantees from the GOI

e. Special Economic Zones (SEZs) formerly called Export Processing Zones (EPZs)

D. Program Determined To Be Terminated

Exemption of Export Credit From Interest Taxes GOI Programs

IV. Analysis of Comments

V. Recommendation