Commission Implementing Regulation (EU) 2022/433 of 15 March 2022 imposing definitive countervailing duties on imports of stainless steel cold-rolled flat products originating in India and Indonesia and amending Implementing Regulation (EU) 2021/2012 imposing a definitive anti-dumping duty and definitively collecting the provisional duty imposed on imports of stainless steel cold-rolled flat products originating in India and Indonesia

COMMISSION IMPLEMENTING REGULATION (EU) 2022/433 of 15 March 2022 imposing definitive countervailing duties on imports of stainless steel cold-rolled flat products originating in India and Indonesia and amending Implementing Regulation (EU) 2021/2012 imposing a definitive anti-dumping duty and definitively collecting the provisional duty imposed on imports of stainless steel cold-rolled flat products originating in India and Indonesia

THE EUROPEAN COMMISSION,

Having regard to the Treaty on the Functioning of the European Union,

Having regard to Regulation (EU) 2016/1037 of the European Parliament and of the Council of 8 June 2016 on protection against subsidised imports from countries not members of the European Union (1) (‘the basic Regulation’), and in particular Articles 15 and 24(1) thereof,

Whereas:

(1) On 17 February 2021 the European Commission (‘the Commission’) initiated an anti-subsidy investigation with regard to imports of stainless steel cold-rolled flat products (‘SSCR’ or ‘the product under investigation’) originating in India and Indonesia (together referred to as ‘the countries concerned’). The Commission published a Notice of initiation in the Official Journal of the European Union (2) (‘the Notice of initiation’).

(2) The Commission initiated the investigation following a complaint lodged on 4 January 2021 by the European Steel Association (‘EUROFER’ or ‘the complainant’) on behalf of the Union industry of stainless steel cold-rolled flat products in the sense of Article 10(6) of the basic Regulation. The complaint contained evidence of subsidisation and of a resulting injury that was sufficient to justify the initiation of the investigation.

(3) Prior to the initiation of the anti-subsidy investigation, the Commission notified the Government of India (‘GOI’) (3) and the Government of Indonesia (‘GOID’) (4) that it had received a properly documented complaint, and invited the GOI and GOID for consultations in accordance with Article 10(7) of the basic Regulation. Consultations were held on 10 February 2021 with the GOI and on 15 February 2021 with the GOID. However, no mutually agreed solution could be reached with either government.

(4) On 18 November 2021, the Commission imposed definitive anti-dumping duties and definitively collected provisional duties imposed on imports of the same product originating in India and Indonesia (5) (‘the anti-dumping Regulation’) in an investigation which had been initiated by a Notice of initiation published on 30 September 2020 (‘the separate anti-dumping investigation’) (6).

(5) The injury, causation and Union interest analyses performed in the present anti-subsidy investigation and the separate anti-dumping investigation are mutatis mutandis identical, since the definition of the Union industry, the sampled Union producers, the period considered and the investigation period are the same in both investigations.

(6) On 7 April 2021, the complainant filed a request for the registration of imports. The Commission analysed the request, but found that no massive imports in a relatively short period of a product benefiting from countervailable subsidies in the countries concerned had taken place. The imports of SSCR from India and Indonesia showed a decrease by 46 % in the seven months after initiation as compared to the imports during the investigation period. Therefore, the conditions to register imports according to Article 24(5) of the basic Regulation were not met and the Commission did not make imports of the product concerned subject to registration.

(7) The investigation of subsidies and injury covered the period from 1 July 2019 to 30 June 2020 (‘the investigation period’). The examination of trends relevant for the assessment of injury covered the period from 1 January 2017 to the end of the investigation period (‘the period considered’). Both periods are identical to those in the separate anti-dumping investigation.

(8) In the Notice of initiation, the Commission invited interested parties to contact it in order to participate in the investigation. In addition, the Commission specifically informed the complainant, the GOI, the GOID, known exporting producers in the countries concerned, known importers and users in the Union about the initiation of the investigation, and invited them to participate.

(9) Interested parties had the opportunity to comment on the initiation of the investigation and to request a hearing with the Commission and/or the Hearing Officer in trade proceedings. Hearings were held with EUROFER and another company.

(10) In the Notice of initiation, the Commission also invited the authorities of the People’s Republic of China (‘GOC’) to participate in the investigation as an interested party. Additionally, the Commissioned informed the GOC about the initiation of the investigation and specifically referred to the invitation to participate as an interested party contained in the Notice of initiation. Subsequently, the GOC informed the Commission that it had registered as an interested party to this investigation.

(11) On 11 October 2021, the Commission sent a request for information to the GOC.

(12) The GOC did not reply to the request for information of the Commission and instead on 21 October 2021 submitted its comments on the request for information itself.

(13) In this submission, on the one side, the GOC stated that the Commission’s procedures may be in violation of WTO rules and EU law.

(14) First, the GOC stated that the Commission did not inform the GOC of the lodging of the complaint, did not hold pre-initiation consultations with the GOC, did not inform it about the initiation and did not invite it directly to become an interested party to the investigation. As the GOC is not an exporting country, the GOC is not an interested Member or party within the meaning of WTO rules and the invitation lacks legal basis and basic procedural requirements.

(15) The Commission noted that these allegations are factually incorrect. In fact, once the invitation to become an interested party was included in the Notice of initiation, which was published in the Official Journal of the European Union on 17 February 2021, the Commission sent the Notice of initiation to the GOC on the same day, expressly drawing its attention to the invitation. Initially, the GOC requested access to the open file by email of 19 February 2021. In reply to that email, on the same day, the Commission explicitly asked again to the GOC whether, by requesting access to the open file, it intended to register as an interested party. On the same day, the GOC confirmed that it had registered as an interested party. The whole email exchange is available in the open file. Therefore, the Commission informed directly the GOC of the Notice of initiation and invited it to become an interested party even twice. Moreover, the Commission did not invite the GOC to hold pre-initiation consultations since the Commission expected the GOID to clarify the involvement of the GOC in providing indirectly financial support to the exporting producers in Indonesia. Thus, since the Commission did not intend to investigate potential countervailable subsidies granted by the PRC, but only the subsidies provided by the GOID through the GOC’s financial support, there was no legal requirement to hold pre-initiation consultations with the GOC.

(16) Second, the GOC stated that it requested to follow the progress of the case out of concern that the Commission may violate WTO rules and EU law, but the GOC is not subject to this investigation and not obliged to provide any information in the investigation. In fact, according to the GOC, the Commission already violated the WTO Agreement on Subsidies and Countervailing Measures (‘SCM Agreement’) and the basic Regulation in the anti-subsidy investigation concerning imports of certain woven and/or stitched glass fibre fabrics originating in the People's Republic of China (‘PRC’ or ‘China’) and Egypt, initiated on 16 May 2019 (7) and resulted in the imposition of definitive countervailing duties published on 15 June 2020 (8) (‘the GFF anti-subsidy investigation’), by including the normal bilateral economic and trade cooperation between China and Egypt into the scope of the so-called cross-country subsidies.

(17) The Commission recalled that it was not the GOC which requested to follow the progress of the case, but it was the Commission itself which invited the GOC to register as an interested party in the Notice of initiation. As concerns the allegations on the GFF anti-subsidy investigation, the Commission considered them to be generic and unsubstantiated, and not the subject matter of this investigation anyway. In any event, the Commission noted that the financial support granted by the GOC, insofar such support is attributable to the GOID, falls under the scope of this investigation. Thus, the information about the financial support granted by the GOC is necessary in this context.

(18) Third, the GOC noted that the Commission did not send to it any request for information in the first eight months after initiation, contrary to the WTO’s requirement that investigating authorities should set out the information required from interested parties as soon as possible, and that the timeframe for the reply was 10 days instead of the 37 days provided by Art. 12.1.1 of the SCM Agreement and Art. 11(2) of the basic Regulation.

(19) The Commission noted that the timing for sending the request for information to the GOC was due to the development of the investigation. Elements asked to the GOC were not fully apparent at the beginning of the investigation and the information requested was based upon aspects that required further investigation after the first RCC session with Indonesian parties. In addition, the Commission replied that it had sent to the GOC a ‘request for information’, not a ‘questionnaire’. The timeframe requirements referred to by the GOC concern only questionnaires. The timeframe envisaged in the request for information was sufficient to provide the information requested. In any case, if the GOC had deemed the timeframe to be too stringent, the GOC could have requested a deadline extension, which it did not.

(20) The GOI did not submit written comments before or after pre-initiation consultations. However, during the consultation, the GOI argued that in general the complaint does not contain sufficient evidence of the existence of the alleged subsidy programmes.

(21) The Commission took into account the comments of the GOI. However, as detailed in the Memorandum on sufficiency of evidence (‘Memorandum’) (9), the Commission concluded after examination of the subsidy allegations, that the complaint, together with the evidence available to the Commission and listed in the Memorandum, contained sufficient evidence tending to show the existence of subsidisation for the product concerned originating in India.

(22) On 15 February 2021 the GOID submitted the written version of its statements delivered at the pre-initiation consultations held the same day. This submission argued that, in general, the complaint did not contain sufficient evidence of the existence of the alleged subsidy programmes.

(23) The Commission took into account this submission at the stage of drafting the Memorandum on sufficiency of evidence and respectfully disagreed with the GOID’s comments. Indeed, the Commission concluded that the complaint, together with the evidence available to the Commission and listed in the Memorandum on sufficiency of evidence, contained sufficient evidence tending to show the existence of subsidisation. In any event, particular attention was paid to the elements highlighted by the GOID during the investigation.

(24) In the Notice of initiation, the Commission stated that it might sample the interested parties in accordance with Article 27 of the basic Regulation.

(25) In the Notice of initiation, the Commission stated that it had decided to limit the investigation to a reasonable number of Union producers by applying sampling, and that it had provisionally selected a sample of Union producers. The Commission selected the provisional sample on the basis of production and Union sales volumes reported by the Union producers in the context of the pre-initiation standing assessment analysis, taking also into account their geographical location. The provisional sample thus established consisted of three Union producers accounting for more than 60 % of production and around 70 % of sales in the Union of the like product, and located in four different Member States. Details of this provisional sample were made available in the file for inspection by interested parties, with the possibility for them to make comments. No comments were made.

(26) Since no comments were received within the prescribed timeframe, the provisional sample of Union producers was confirmed. It consisted of Acciai Speciali Terni S.p.A., Aperam Stainless Europe and Outokumpu Stainless OY. The definitive sample is representative of the Union industry. This sample coincided with the sample of Union producers in the separate anti-dumping investigation.

(27) To decide whether sampling was necessary and, if so, to select a sample, the Commission asked all known unrelated importers to provide the information specified in the Notice of initiation.

(28) One unrelated importer made itself known as interested party and provided the requested information. In view of the low number of replies received, sampling was not necessary. No comments were made on this decision. This importer was invited to complete a questionnaire.

(29) In view of the potentially large number of exporting producers in the countries concerned, the Notice of initiation provided for sampling in India and Indonesia. Therefore, the Commission asked all known exporting producers in India and Indonesia to provide the information specified in the Notice of initiation to decide whether sampling was necessary and, if so, to select a sample.

(30) In addition, the Commission asked the Mission of India to the European Union and the Embassy of the Republic of Indonesia in Brussels to identify and/or contact other exporting producers, if any, that could be interested in participating in the investigation.

(31) Two (groups of) Indian companies submitted a sampling reply within the time limit provided for. The two exporting producers in question: Chromeni Steels Private Limited (‘Chromeni’) and Jindal Group accounted for 100 % of the Indian export volume of SSCR from India to the Union during the investigation period. The Commission therefore abandoned sampling with regard to India.

(32) The part of the Jindal Group (India) which is involved in the production and sales of SSCR consists of two exporting producers, two traders, one service supplier and one raw-material supplier.

(33) Jindal Group is vertically integrated from the production of coke, gas and ferrochromium, through production of liquid stainless steel, slabs, hot-rolled coils, down to production of SSCR.

(34) Chromeni is not vertically integrated. It starts manufacturing SSCR from hot-rolled stainless steel coils.

(35) Three exporting producers or groups of exporting producers in Indonesia provided the requested information and agreed to be included in the sample. In accordance with Article 27(1) of the basic Regulation, the Commission selected a sample of two groups of exporting producers on the basis of the largest representative volume of exports from Indonesia to the Union during the investigation period, which could reasonably be investigated within the time available: PT. Indonesia Ruipu Nickel and Chrome Alloy (‘IRNC’) and PT. Jindal Stainless Indonesia (‘Jindal Indonesia’). The sampled groups of exporting producers accounted for 71 % of the estimated total export volume of SSCR from Indonesia to the Union during the investigation period.

(36) IRNC is a vertically integrated company. The company starts manufacturing SSCR from nickel ore and therefore it has its own smelters. Furthermore, IRNC is part of a group of companies that manufacture different type of steel products, which are also vertically integrated (they start from nickel ore and therefore have their own smelters) and provide upstream steel products to IRNC for the manufacturing of SSCR. These companies (together with IRNC, jointly referred to as ‘the IRNC Group’) are PT. Indonesia Guang Ching Nickel and Stainless Steel Industry (‘GCNS’), PT Indonesia Tsingshan Stainless Steel (‘ITSS’), PT. Sulawesi Mining Investment (‘SMI’) and PT. Tsingshan Steel Indonesia (‘TSI’). They are all located in the Morowali Industrial Park in Indonesia.

(37) Jindal Indonesia is not vertically integrated. It starts manufacturing SSCR from stainless steel coils.

(38) In accordance with Article 27(2) of the basic Regulation, the Commission consulted all known exporting producers concerned and the GOID on the selection of the sample. No comments were received and the sample was thus confirmed.

(39) The third Indonesian exporting producer that returned the sampling form informed the Commission that it did not intend to request individual examination under Article 27(3) of the basic Regulation. Nevertheless, the Commission informed this non-sampled exporting producer that it was required to provide a questionnaire reply if it wished to be examined individually. However, it did not provide a questionnaire reply. As a result, no individual examinations were possible.

(40) The Commission sent questionnaires to the three sampled Union producers, the complainant, the one unrelated importer that had made itself known, and the four exporting producers in the countries concerned. The same questionnaires had also been made available online (10) on the day of initiation.

(41) Questionnaire replies were received from the three sampled Union producers, the complainant, one unrelated importer, two exporting producers from India and the two sampled exporting producers from Indonesia.

(42) The Commission also sent a questionnaire to the GOI and the GOID.

(43) The questionnaire for GOI included specific questionnaires to (i) any financial institution that provided loans or export credits to the companies under investigation or to their buyers (in the context of export buyer credits), (ii) the top 10 producers and distributors of the input materials allegedly provided for less than adequate remuneration (chromium ore and iron ore) to the two Indian exporting producers, for the production of the product under investigation.

(44) The questionnaire to the GOID included a specific questionnaire for the Lembaga Pembiayaan Ekspor Indonesia (‘Indonesia Eximbank’). This financial institution had been specifically referred to in the complaint as a public body or body entrusted or directed by the GOID to grant subsidies. In addition, for administrative convenience, the GOID was asked to forward specific questionnaires to (i) any other financial institution that provided loans or export credits to the sampled companies or to the buyers of the sampled companies (in the context of export buyer credits) (11), (ii) the top 10 producers and distributors of the main input materials for the product under investigation, as well as to any other input producers and distributors of the materials in question, which have provided inputs to the two sampled companies, and (iii) PT. Asuransi Asei Indonesia (‘ASEI’), specifically referred to in the complaint as a provider of export credit insurance on concessional basis, potentially also to the producers of the product under investigation.

(45) Furthermore, the questionnaire to the GOID included a specific questionnaire for PT. Indonesia Morowali Industrial Park (‘IMIP’), the company operating the industrial park where IRNC, one of the sampled exporting producers, is located. Since IMIP is a company related to IRNC, IRNC was also requested to forward the same questionnaire to IMIP.

(46) The GOID was asked to gather any responses provided by these entities and to send them directly to the Commission.

(47) The Commission received questionnaire replies from the GOI, which did not include however replies to the specific questionnaires referred to in recital (43), as well as from the GOID, which included replies from the Indonesia Eximbank, three other financial institutions, eleven input suppliers: four coal miners (PT. Sungai Danau Jaya, PT. Tanah Bumbu Resources, PT. Wahana Baratama Mining, and PT. Bukit Asam Tbk), three nickel ore miners (PT. GAG Nikel, PT. Ceria Nugraha Indotama and PT. Tiran Indonesia), four traders of nickel ore and coal (PT. Ekasa Yad Resouces, PT. Batu Bara Global Energy, PT. Rwood Resources Indonesia, and PT. Bumi Nusantara Jaya), ASEI and IMIP. The Commission received the same IMIP’s questionnaire replies also from IRNC.

(48) In view of the outbreak of COVID-19 and the confinement measures put in place by various Member States as well as by various third countries, the Commission could not carry out verification visits pursuant to Article 16 of the basic Regulation at provisional stage. The Commission instead cross-checked remotely all the information deemed necessary for its provisional determinations in line with its Notice on the consequences of the COVID-19 outbreak on anti-dumping and anti-subsidy investigations (12).

(49) Without prejudice to the application of Article 28 of the basic Regulation, the Commission cross-checked remotely via videoconference the GOI and the GOID’s replies to the questionnaires. Officials from relevant ministries participated during the remote cross-checking (‘RCC’). The RCC of the GOID included also the RCC of the information provided by Indonesia Eximbank and by two input suppliers, namely PT. Gag Nikel and PT. Sungai Danau Jaya.

(51) On 20 October 2021, pursuant to Article 29(a)(2) of the basic Regulation, the Commission informed interested parties that it intended not to impose provisional measures and to continue with the investigation.

(52) The Commission continued seeking and verifying all information it deemed necessary for its definitive findings.

(53) On 17 December 2021 the Commission informed all parties of the essential facts and considerations on the basis of which it intended to impose a definitive anti-subsidy duty on imports of the product concerned (‘final disclosure’). All parties were granted a period within which they could make comments thereon. Interested parties had an opportunity to comment on the initiation of the investigation and to request a hearing with the Commission and/or the Hearing Officer in trade proceedings.

(54) Subsequently, on 21 January 2022 interested parties received an additional final disclosure (‘additional final disclosure’) and they were granted a period within which they could make comments thereon. Interested parties had an opportunity to request a hearing with the Commission and/or the Hearing Officer in trade proceedings.

(55) Comments were received from the complainant, the GOI, the GOID, the GOC, the sampled exporting producers, the unrelated importer LSI, and the consortium of importers and distributors Euranimi.

(56) Parties who so requested were also granted an opportunity to be heard. Hearings took place with IRNC Group and Euranimi.

(57) The comments submitted by the interested parties were considered and taken into account where appropriate in this Regulation.

(58) IRNC Group claimed that its rights of defence were violated because it had not been given enough time to prepare the comments on final disclosure. In response, the Commission highlighted that the IRNC Group was initially given an 18–day deadline to comment, which is well above the legal time period of 10 days which the Commission is required to provide to interested parties upon final disclosure. In addition, the Commission granted a three day extension to the company upon its request. Therefore, the Commission considered that the IRNC Group was given sufficient time to submit its comments on final disclosure, and the claim was rejected.

(59) Jindal Group and Jindal Indonesia requested the Commission to ensure that the proposed countervailing duties and the steel safeguard measures were not cumulated, as done in the anti-dumping Regulation.

(60) This was addressed in recitals (1083) and (1084).

(61) For the sake of legal certainty, Jindal Group and Jindal Indonesia also requested the Commission to include the proposed regulation imposing anti-subsidy duties in Regulation (EU) 2019/1382 (13).

(62) The Commission noted that Article 3 already addresses the issue of interaction between duties levied according to this Regulation and duties levied according to Regulation (EU) 2019/159 (14). In the last amendment of Regulation (EU) 2019/1382, the Commission already announced that in the future each Regulation imposing anti-dumping and/or anti-subsidy concerning steel products also subject to the safeguard measure would include specific provisions preventing their concurrent application with the above-quota safeguard tariff duty (15).

(63) After final disclosure, Euranimi and LSI argued that the Commission should suspend the measures pursuant to Article 24(4) of the basic Regulation.

(64) The Commission acknowledged receipt of the information provided by these parties and reminded them that, should the Commission consider it appropriate, the Commission may decide to suspend measures where market conditions have temporarily changed to an extent that injury would be unlikely to resume as a result of the suspension, and when it is in the Union interest to do so.

(65) The product concerned by this investigation is flat-rolled products of stainless steel, not further worked than cold-rolled (cold-reduced), currently falling under CN codes 7219 31 00, 7219 32 10, 7219 32 90, 7219 33 10, 7219 33 90, 7219 34 10, 7219 34 90, 7219 35 10, 7219 35 90, 7219 90 20, 7219 90 80, 7220 20 21, 7220 20 29, 7220 20 41, 7220 20 49, 7220 20 81, 7220 20 89, 7220 90 20 and 7220 90 80 and originating in India and Indonesia. The CN codes are given for information only.

(67) The Commission concluded that those products are therefore like products within the meaning of Article 2(c) of the basic Regulation.

(68) One Union producer, who also acted as an importer and end user, requested the exclusion of stainless steel cold rolled products with steel grade 200 and 201 from the product scope. The investigation has established that such products are interchangeable as far as characteristics are concerned. Also, the Commission came to the conclusion that granting this exclusion request would indeed pose an unreasonable burden for customs authorities, which would need to carry out a laboratory test and check the end use for each shipment. Furthermore, the data that the company provided with regard to its purchases of products with steel grade 200 and 201 and other products from the countries concerned showed that it did buy other products falling within the product scope of the current investigation from those countries, which inherently bears the risk of cross-compensation. Furthermore, although the company claims that these steel grades have only one end-use, it cannot be excluded that these steel grades might have other uses.

(69) Therefore, the Commission concluded that granting this product exclusion request would not be appropriate and it was thus rejected.

(71) The complainant claimed that Indian banks provide pre-shipment export financing to exporters who require payment for sold goods before the shipment of those goods. Similarly, post-shipment export financing is a loan that financial institutions provide to exporters. This scheme is managed by the Reserve Bank of India (RBI), India's central bank. It was further claimed that GOI, through its central bank, entrusts or directs private Indian banks to provide a financial contribution in the form of a direct transfer of funds (Article 3(1)(a)(i) and Article 3(1)(a)(iv) of the basic Regulation). To benefit from these schemes the exporter merely needs to show proof of export without any risk assessment being required. The benefit to the exporter is therefore the difference between preferential rate thus received and the market rate for similar loans in India.

(72) One of the Indian exporting producers was using, to a limited extent, pre-shipment credits in the IP.

(73) The company was using pre-shipment credits under working capital facilities (credit lines) opened by public and private banks. The interest rate applied were established in line with market conditions and at the level charged by other public and private banks (including international banks), with which the company had open credit lines. The interest rate was based on Benchmark Prime Lending Rate (‘BPLR’) – in case of export credits in INR or on LIBOR – in case of export credits in USD. In both cases, a spread was added, based on the credit rating assessment of the company. The same credit lines were used also for the domestic short-term financing.

(74) The two Indian exporting producers did not use post-shipment export credits during the IP.

(75) As a consequence, the Commission did not need to further investigate these schemes.

(76) The complainant claimed that the interest equalization scheme (‘IES’) provides exporters with a financial contribution in the form of a direct transfer of funds by providing compensation to the lenders of those exporters equivalent to 3 % to 5 % of the value of the interest that would otherwise have been due on certain loans.

(77) The two Indian exporting producers did not use IES during the IP.

(78) As a consequence, the Commission did not need to further investigate this scheme.

(79) The GOI fully owns two Export Credit Agencies: Export Credit Guarantee Corporation of India Ltd (ECGC) and Exim Bank of India. The principal goal of both agencies is the promotion of Indian exports. The complainant claimed that incentives provided by these Agencies confer a benefit to the exporters because they provide insurance, credit guarantees, credit lines and export credits under conditions less strict than those on the market.

(80) The two Indian exporting producers did not use credit guarantees, export credits or credit lines provided by ECGC or Exim Bank.

(81) Two producers of Jindal Group were covered however by insurance policies of ECGC. However, the Commission did not find these insurance agreements deviating from the normal market conditions. The premium fees depended on maximum loss coverage, countries and buyers covered by the policy and the previous ‘claim history’, i.e. the risk profile of the companies. The Commission verified that all the premium fees and charge fees were paid.

(82) As a consequence, the Commission did not need to further investigate this scheme.

(83) The complainant claimed that GOI provides sector specific preferential loans via State Bank of India (SBI) and Steel Development Fund (SDF) to the stainless steel producers.

(84) SBI was one of the banks granting to Jindal Group long-terms loans but the Commission did not find them sector specific or preferential. The interest rate was established based on BLPR + spread. In fact, the interest rate charged by SBI was slightly higher than interest rates charged by private banks granting long-term loans to Jindal Group with similar duration.

(85) The two Indian exporting producers did not receive loans from the Steel Development Fund during the IP.

(86) As a consequence, the Commission did not need to further investigate this scheme.

(87) The complainant claimed that GOI provides steel producers with R&D grants via SDF. The R&D grants can also be obtained directly from the Ministry of Steel.

(88) The two Indian exporting producers did not receive R&D grants in IP or grants that could be allocated to the IP.

(89) As a consequence, the Commission did not need to further investigate this scheme.

(90) The complainant claimed that the producers of the product under investigation benefit from several pre-export and post-export duty drawback schemes under which the imported raw materials or capital goods can be exempted from custom duties and import taxes. These schemes confer a benefit in the sense of Article 3(1)(a)(ii) and 3(2) of the basic Regulation to exporting manufacturers, equal to the amount of revenue foregone by the government and therefore to the amount of duties and taxes not collected.

(91) As explained in recitals (117) to (205) below, one or both Indian exporting producers benefited from some of the duty exemptions and remission schemes, namely: AAS, DDS, EPCGS and MEIS.

(92) However, none of the two exporting producers benefited in the IP from the DFIA scheme, nor had domestic sales transactions that were classified as Deemed Export. Therefore, the Commission did not need to further investigate those latter two schemes.

(93) The complainant claimed that the producers of the product under investigation benefit from several tax incentives being registered as EOU or being located in SEZ.

(94) However, neither of the two Indian exporting producers was registered as EOU during the IP, nor benefited from any past capital goods subsidies as an EOU that could be allocated to the IP. None of the two exporting Indian producers is also located in a SEZ.

(95) As a consequence, the Commission did not need to further investigate these schemes.

(97) The two Indian exporting producers did not enjoy any income tax exemptions, deductions or reduced tax rates during the IP.

(98) As a consequence, the Commission did not need to further investigate this scheme.

(99) The complainant claimed that the GOI has implemented a policy involving the setting of high export taxes on iron ore. The government thus ensured an increase in the domestic supply of these products and guaranteed that iron prices remain well below international levels. These export duties, together with other elements, amounted to the GOI entrusting or directing raw material producers to provide inputs to the Indian producers for less than adequate remuneration.

(100) However, none of the two Indian exporting producers is using iron ore in its production process. Therefore, the Commission did not need to further investigate this scheme.

(101) The complainant claimed that the GOI has supported the Indian cold-rolled stainless steel industry through government procurements. It was claimed that government agencies are obliged to use a minimum percentage of Indian steel and iron in its procurement (between 15 % and 50 %). Furthermore, when a foreign bidder offers the lowest price, they can only obtain up to half of the order quantity. The other part must be awarded to a local supplier that is able to price within a 20 % range above the foreign bidder's price. Only if not a single local supplier can price within 20 % of the lowest price (an unlikely event, given the broad margin), can the more efficient, foreign bidder obtain the rest of the contract.

(102) One of the Indian exporting producers was successfully bidding in the IP in the government procurement procedures.

(103) The Commission verified all the procurement procedures and tenders related to the Indian company in question in the IP. However, no elements of concrete subsidization were found.

(104) Tenders are published online, on the websites of the Indian respective administration units, institutions or public companies (for example Indian Railways) and the companies are free to send their offers. It is a standard practice that procurement volume is divided between two companies. The company, which offered the lowest price, is granted 60 % of the procurement and the company, which offered the second lowest price, is granted the remaining 40 % of the contract, under the condition that it will adjust its price to the level offered by the winner of the bid. This rule applies also if one or both companies in question are foreign bidders.

(105) Admittedly, some procurements are open only for domestic companies. However, if the procedure is open for the foreign bidders there is no price discrimination as alleged by the complainant. The price preference (20 %) for the domestic suppliers exists only in case of procurements related to capital goods (16).

(106) The Commission verified that in all the procurement procedures awarded to the Indian SSCR producer in the IP, whether open to foreign bidders or not, the company selected had offered the lowest price or, as a company with the second best offer, had to adjust its price to the lowest price offered.

(107) Following final disclosure, the complainant claimed that the exclusion of the foreign bidders from some of the procurement procedures led to reduced competition and therefore resulted in higher overall prices, which equated to a financial contribution through the purchase of goods at more than adequate remuneration.

(108) Moreover, the complainant observed that by excluding imports from certain tenders, the Indian procurement rules guarantee certain volumes of the purchases for the Indian producers, which confers in itself a benefit to them.

(109) The Commission agrees that the exclusion of foreign bidders potentially reduces competition and may lead to the creation of a market only for domestic bidders. However, the volumes sold by the Jindal Group through the award of public tenders were negligible against the background of the total domestic sales of the company in the IP. In addition, in the analysis of procurement procedures awarded to the Indian SSCR producer in the IP, the Commission did not notice substantial differences in the price levels between winning offers in tenders opened for the foreign companies and those where they did not participate. As a result, in this particular case the Commission has not found any material benefit within the meaning of the Article 3(1)(b) of the basic Regulation.

(110) The complainant claimed that Exim Bank offers Lines of Credit and Buyer's Credit. Those incentives are provided not to exporters but to foreign governments, foreign development banks and overseas financial institutions, commercial banks abroad or other entities. The funding enables them to buy from Indian exporters on deferred credit terms.

(111) None of the export sales of the exporting producers under investigation during the IP were covered by Exim Bank lines of credit or buyer’s credit.

(112) As a consequence, the Commission did not need to further investigate these schemes.

(114) Only one of the Indian exporting producers under investigation is located in the State of Gujarat and could potentially use the local subsidy schemes listed above. However, the company was not found to benefit from any of these schemes in the IP.

(115) As a consequence, the Commission did not need to further investigate these schemes.

(116) The Commission found that one exporting producer availed itself of this measure during the IP. However, since it appeared that the benefit conferred to this company was negligible (0,02 %), the Commission decided not to investigate this measure further.

(117) The AAS, EPCGS and MEIS schemes are based on the Foreign Trade (Development and Regulation) Act 1992 (No. 22 of 1992) which entered into force on 7 August 1992 (‘Foreign Trade Act’). The Foreign Trade Act authorises the GOI to issue notifications regarding the export and import policy. These are summarised in ‘Foreign Trade Policy’ documents, which are normally issued by the Ministry of Commerce every five years and updated regularly.

(118) The Foreign Trade Policy document relevant for the IP is Foreign Trade Policy 2015-20 (‘FTP 2015-20’). The GOI also sets out the procedures governing FTP 2015-20 in a ‘Handbook of Procedures, 2015-20’ (‘HOP 2015-20’).

(119) The DDS scheme is based on section 75 of the Customs Act of 1962, on section 37 of the Central Excise Act of 1944, on sections 93A and 94 of the Financial Act of 1994, and on the Customs, Central Excise Duties and Service Tax Drawback Rules of 1995. The drawback rates are published on a regular basis.

(120) As a general remark, it is noted that the Commission was not able to finalize within a reasonable time the remote cross checking of certain documents related to export/import transactions within a framework of the duty drawback schemes described in this sub-section, as requested and agreed during the RCC. In this regard, the Commission used best facts available in case of discrepancies found between the figures reported by the companies and the GOI, on the basis of Article 28(3) of the basic Regulation.

(121) Following final disclosure, one of the Indian exporting producers claimed that the purpose of the AAS, DDS and MEIS schemes is to neutralize the customs duties that the company pays on imports of raw materials used in the exported products and therefore these three schemes do not confer a benefit to the company.

(122) However, contrary to this statement, benefits received by the companies under DDS and MEIS schemes do not have any direct link with duties due on imports of raw materials used by the company in the exported products.

(123) In the case of the DDS scheme, an exporting company receives cash payments, which are linked only with the FOB value of its exports. The company in question is not required to import any raw materials at all.

(124) In the case of the MEIS scheme, an exporting producer receives scripts which might be sold on the market or used to offset future import duties due, but this offset is not limited to the raw materials used in the production of the exported products for which MEIS scripts were received. Thus, MEIS scripts can be used to offset any import duties due, including import duties concerning capital goods. They can also be cashed even if the company is not importing anything at all.

(125) Only in the case of the AAS scheme there is a direct link between import duties exemption on raw materials imported by the company and exported products. Thus, the Commission does not treat the duty exemption as a benefit to the company, provided that the latter can show actual consumption of raw materials imported under AAS in the production of the exported final products.

(126) The Commission established that one Indian exporting producer used AAS during the IP.

(127) The detailed description of the scheme is contained in paragraphs 4.03 to 4.24 of the FTP 2015-20 and chapters 4.04 to 4.52 of the HOP 2015-20 and the updated HOP 2015-20.

(128) AAS consists of six sub-schemes, as described in more detail in the following section. Those sub-schemes differ, inter alia, in the scope of eligibility. Manufacturer-exporters and merchant-exporters ‘tied to’ supporting manufacturers are eligible for the AAS physical exports and for the AAS annual requirement sub-schemes. Manufacturer-exporters supplying the ultimate exporter are eligible for AAS for intermediate supplies. Main contractors which supply to the ‘deemed export’ categories mentioned in paragraph 7.02 of the FTP 2015-20, such as suppliers of an export oriented unit (‘EOU’), are eligible for the AAS deemed export sub-scheme. Eventually, intermediate suppliers to manufacturer-exporters are eligible for ‘deemed export’ benefits under the sub-schemes Advance Release Order and Back to back inland letter of credit.

(129) The AAS can be issued in the situations described below.

(130) Physical exports: This is the main sub-scheme. It allows for duty-free import of input materials for the production of a specific exported end product. ‘Physical’ in this context means that the export product has to leave the Indian territory. An import allowance and export obligation, including the type of exported product are specified in the licence.

(131) Annual requirement: Such an authorisation is not linked to a specific exported product, but to a wider product group (e.g. chemical and allied products). The licence holder can – up to a certain value threshold set by its past export performance – import duty-free any input to be used in manufacturing any of the items falling under such a product group. It can choose to export any resulting product falling under the product group using such duty- exempt material.

(132) Intermediate supplies: This sub-scheme covers cases where two manufacturers intend to produce a single export product and divide the production process. The manufacturer-exporter who produces the intermediate product can import duty-free input materials and can obtain for this purpose an AAS for intermediate supplies. The ultimate exporter finalises the production and is obliged to export the finished product.

(133) Deemed exports: This sub-scheme allows a main contractor to import inputs free of duty which are required in manufacturing goods to be sold as ‘deemed exports’. According to the GOI, deemed exports refer to those transactions in which the goods supplied do not leave the country. A number of categories of supply is regarded as deemed exports provided the goods are manufactured in India, e.g. supply of goods to an EOU or to a company situated in a special economic zone (‘SEZ’).

(134) Advance Release Order (‘ARO’): The AAS holder intending to source the inputs from domestic sources, in lieu of direct import, has the option to source them against AROs. In such cases the Advance Authorisations are validated as AROs and are endorsed to the domestic supplier upon delivery of the items specified therein. The endorsement of the ARO entitles the domestic supplier to the benefits of deemed exports as set out in paragraph 7.03 of the FTP 2015-20 (i.e. AAS for intermediate supplies/deemed export, deemed export drawback and refund of terminal excise duty). The ARO mechanism refunds taxes and duties to the supplier instead of refunding the same to the ultimate exporter in the form of drawback/refund of duties. The refund of taxes/duties is available both for domestic inputs as well as imported inputs.

(135) Back to back inland letter of credit: This sub-scheme again covers indigenous supplies to an Advance Authorisation holder. The holder of an Advance Authorisation can approach a bank for opening an inland letter of credit in favour of a domestic supplier. The authorisation will be validated by the bank for direct import only in respect of the value and volume of items being sourced domestically instead of importation. The domestic supplier will be entitled to deemed export benefits as set out in paragraph 7.03 of the FTP 2015-20 (i.e. AAS for intermediate supplies/deemed export, deemed export drawback and refund of terminal excise duty).

(136) The Commission found that one exporting producer using the scheme obtained concessions under the first sub-scheme i.e. AAS physical exports during the IP. It is therefore not necessary to establish the countervailability of the remaining unused sub-schemes.

(137) For verification purposes by the Indian authorities, an Advance Authorisation holder is legally obliged to maintain ‘a true and proper account of consumption and utilisation of duty-free imported/domestically procured goods’ in a specified format (chapter 4.51 and Appendix 4H HOP 2015-20), i.e. an actual consumption register. This register has to be verified by an external chartered accountant/cost and works accountant who issues a certificate stating that the prescribed registers and relevant records have been examined and the information furnished under Appendix 4H is true and correct in all respects.

(138) With regard to the sub-scheme used during the IP by the company concerned, i.e. physical exports, the import allowance and the export obligation are fixed in volume and value by the GOI and are documented on the Authorisation. In addition, at the time of import and of export, the corresponding transactions are to be documented by Government officials on the Authorisation. The volume of imports allowed under the AAS is determined by the GOI on the basis of Standard Input Output Norms (‘SIONs’) which exist for most products including the product under investigation.

(139) The imported input materials are not transferable and have to be used to produce the resulting export product. The export obligation must be fulfilled within a prescribed time frame after issuance of the licence (18 months with two possible extensions of 6 months each).

(140) There is no close nexus between the imported inputs and the exported finished products. The eligible input materials can also be imported and used for products other than the product under investigation. Moreover, licences for various products can be clubbed. This means that exports under AAS licence of one product may give right to duty-free imports of inputs under an AAS licence for another product.

(142) The exemption from import duties is a subsidy within the meaning of Article 3(1)(a)(ii) and Article 3(2) of the basic Regulation, namely it constitutes a financial contribution of the GOI since it foregoes duty revenue which would otherwise be due and it confers a benefit upon the investigated exporter since it improves its liquidity.

(143) In addition, AAS physical exports are contingent in law upon export performance, and therefore deemed to be specific and countervailable under Article 4(4), first subparagraph, point (a) of the basic Regulation. Without an export commitment, a company cannot obtain benefits under this scheme.

(144) The sub-scheme used in the present case cannot be considered a permissible duty drawback system or substitution drawback system within the meaning of Article 3(1)(a)(ii) of the basic Regulation. It does not conform to the rules laid down in Annex I item (i), Annex II (definition and rules for drawback) and Annex III (definition and rules for substitution drawback) of the basic Regulation. The GOI did not effectively apply a verification system or a procedure to confirm whether and in what amounts inputs were consumed in the production of the exported product (Annex II(4) of the basic Regulation and, in the case of substitution drawback schemes, Annex III(II)(2) of the basic Regulation). It is also considered that the SIONs for the product under investigation were not sufficiently precise and that, in themselves, those SIONs cannot constitute a verification system of actual consumption because the design of those standard norms does not enable the GOI to verify with sufficient precision what amounts of inputs were consumed in the export production. In addition, the GOI did not carry out a further examination based on actual inputs involved, although this would need to be carried out in the absence of an effectively applied verification system (Annex II(5) and Annex III(II)(3) to the basic Regulation).

(145) The sub-scheme is therefore countervailable.

(146) In the absence of permitted duty drawback systems and lack of the possibility of verification of the actual consumption rate of the relevant inputs, the total amount of custom duties forgone (basic custom duty and custom cess) is considered an excess remission that would constitute a countervailable subsidy in accordance with Article 3(1)(a)(ii) of the basic Regulation.

(147) The exporting producer was informed of the Commission intentions to apply Article 28 of the basic Regulation and best facts available in this regard by the Letter of 22 November 2021.

(148) Contrary to further claims of the company that such methodology of calculation of benefit under AAS is a departure from previous Commission practice and is based on mere assumptions and inferences, it is reiterated that the company did not provide any data, which would allow calculation of the actual excess remission.

(149) In accordance with Article 7(1)(a) of the basic Regulation, fees incurred by the company to obtain the subsidy were deducted from the total subsidy amount where claimed.

(150) In accordance with Article 7(2) of the basic Regulation, the excess remission should be allocated over the total export turnover as appropriate denominator, because the subsidy is contingent upon export performance.

(151) The subsidy rate established with regard to this scheme during the IP amounted to 0,05 %.

(152) Following final disclosure, the Indian exporting producer in question reiterated its claims with regard to the unwarranted application of Article 28 of the basic Regulation and the methodology of calculation of the company benefit under this scheme used by the Commission.

(153) However, no new arguments were presented. It is recalled that the Commission had no other option than to refer to best facts available, as the company did not provide any data which would allow standard calculation of the excess remission under this scheme. In any event, taking into account the subsidy rate established, as indicated in recital (151) above, the Commission decided not to countervail the negligible benefit conferred to Jindal Group under the AAS.

(154) The Commission established that one Indian exporting producer used the DDS during the IP.

(155) The legal basis applicable during the review investigation period was the Custom & Central Excise Duties Drawback Rules 1995 (‘the 1995 DDS Rules’), as amended in 2006 (17) and then replaced by Customs and Central Excise Duties Drawback Rules, 2017 (18) (‘the 2017 Rules’) which entered into force on 1 October 2017. Rule 3(2) of the 1995 DDS Rules governs the method of calculation of this duty drawback scheme. Rule 12(1)(a)(ii) of the said DDS Rules governs the Declaration that the exporting producers need to file in order to benefit from the scheme. These Rules have remained identical in the 2017 DDS Rules and correspond to Rule 3(2) and Rule 13(1)(a)(ii) respectively.

(156) In addition, Circular No. 24/2001 (19) contains specific instructions how to implement the Rule 3(2) and the Declaration that exporters need to produce under the Rule 12(1)(a)(ii).

(157) The Rule 4 of the 1995 DDS Rules stipulates that the Central Government may revise amount or rates determined under the rule 3. The Government has made a number of modifications, the last ones revising the rates being Notification No. 95/2018 – CUSTOMS and Notification No. 07/2020 – CUSTOMS. As a result, for the product under investigation, the DDS rates were 1,8 % and 1,6 % of the FOB value of the exported products, for the first and second part (20) of the IP respectively. The same DDS rates are applied to stainless steel hot-rolled products exported by the Indian company in question.

(158) Any manufacturer-exporter or merchant-exporter is eligible for this scheme.

(160) In other words, the GOI based the refundable amount on industry-wide average values of relevant customs duties paid on imported raw materials and an average industry consumption ratio collected from what the GOI considers as being representative manufacturers of the eligible export products. The GOI then expresses the amount to be refunded as a percentage of the average export value of the eligible exported products.

(161) The GOI uses this percentage to calculate the amount of the duty drawback all eligible exporters are entitled to receive. The rate for this scheme is determined by the GOI on a product-by-product basis.

(162) In order to be eligible to benefit from this scheme, a company must export. At the moment when shipment details are entered in the Customs server, it is indicated that the export is taking place under the DDS and the DDS amount is fixed irrevocably. After the shipping company has filed the Export General Manifest and the customs office has satisfactorily compared that document with the shipping bill data, all conditions are fulfilled to authorise the payment of the drawback amount by either direct payment on the exporter's bank account or by draft.

(163) The exporter also has to produce evidence of realisation of export proceeds by means of a Bank Realisation Certificate (‘BRC’). This document can be provided after the drawback amount has been paid but the GOI will recover the paid amount if the exporter fails to submit the BRC within a given deadline.

(164) The drawback amount can be used for any purpose and, in accordance with Indian accounting standards, the amount can be booked on an accrual basis as income in the commercial accounts, upon fulfilment of the export obligation.

(165) The relevant legislation and administrative instructions stipulate that the Indian customs administration should require no evidence that the exporter requesting the duty drawback must have incurred or will incur a customs duty liability for imports of the raw materials needed for the manufacture of the exported product. In addition, during the RCC, the GOI confirmed that companies that would source domestically all the raw materials would still benefit from the full rate calculated under Rule 3(2) mentioned above.

(166) The DDS provides subsidies within the meaning of Article 3(1)(a)(I) and Article 3(2) of the basic Regulation. The so-called duty drawback amount is a financial contribution by the GOI as it takes form of a direct transfer of funds by the GOI. There are no restrictions as to the use of these funds. In addition, the duty drawback amount confers a benefit upon the exporter, because it improves its liquidity.

(167) The rate of duty drawback for exports is determined by the GOI on a product-by-product basis. However, although the subsidy is referred to as a duty drawback, the scheme does not have all the characteristics of a permissible duty drawback system or substitution drawback system within the meaning of Article 3(1)(a)(ii) of the basic Regulation; nor does the scheme conform to the rules laid down in Annex I item (I), Annex II (definition and rules for drawback) and Annex III (definition and rules for substitution drawback) of the basic Regulation. The cash payment to the exporter is not necessarily linked to actual payments of import duties on raw materials, and is not a duty credit to offset import duties on past or future imports of raw materials. In addition, there is no system or procedure in place to confirm which inputs are consumed in the production of the exported products and in what amounts. In addition, the GOI did not carry out a further examination based on actual inputs involved, although this would need to be carried out in the absence of an effectively applied verification system (Annex II(5) and Annex III(II)(3) to the basic Regulation).

(168) The payment by the GOI subsequent to exports made by exporters is contingent upon export performance and therefore this scheme is deemed to be specific and countervailable under Article 4(4)(a) of the basic Regulation.

(169) In view of the above, it is concluded that the DDS is countervailable.

(170) In accordance with Article 3(2) and Article 5 of the basic Regulation, the Commission calculated the amount of countervailable subsidies in terms of the benefit conferred on the recipient, which was found to exist during the IP. In this regard, the Commission established that the benefit is conferred on the recipient at the time when an export transaction is made under this scheme. At this moment, the GOI is liable to the payment of the drawback amount, which constitutes a financial contribution within the meaning of Article 3(1)(a)(I) of the basic Regulation. Once the customs authorities issue an export shipping bill which shows, inter alia, the amount of drawback which is to be granted for that export transaction, the GOI has no discretion as to whether or not to grant the subsidy.

(171) In the light of the above, the Commission considered appropriate to assess the benefit under the DDS as being the sum of the drawback amounts earned on export transactions made under this scheme during the IP. The Commission took into account duty drawback amounts earned on all the export transactions of the Indian exporting producer as the company exports only the product under investigation and hot-rolled stainless steel products, which are semi-products for the production of the product under investigation covered by the same DDS rates.

(172) In accordance with Article 7(2) of the basic Regulation, the Commission allocated these subsidy amounts over the total export turnover of the company during IP as appropriate denominator, because the subsidy is contingent upon export performance and it was not granted by reference to the quantities manufactured, produced, exported or transported.

(173) The subsidy rate established with regard to this scheme during the IP for Jindal Group amounted to 1,65 %.

(174) The Commission established that two Indian exporting producers received concessions under the EPCGS which could be allocated to the product concerned during the IP.

(175) The detailed description of the EPCGS is contained in chapter 5 of the FTP 2015-20 as well as in chapter 5 of HOP 2015-20.

(176) Manufacturer-exporters, merchant-exporters ‘tied to’ supporting manufacturers and service providers are eligible for this measure.

(177) Under the condition of an export obligation, a company is allowed to import capital goods (new and second- hand capital goods up to 10 years old) at a reduced duty rate. To this end, the GOI issues, upon application and payment of a fee, an EPCGS licence. The scheme provides for a reduced import duty rate applicable to all capital goods imported under the scheme. In order to meet the export obligation, the imported capital goods must be used to produce a certain amount of goods deemed for export during a certain period. Under the FTP 2015-20 and updated FTP 2015-20 the capital goods can be imported with a 0 % duty rate under the EPCGS. However, in case of capital goods imported before 2015, 3 % duty rate was also an alternative – in that case, the time for realization of the export obligation was longer. The export obligation, which amounts to six times the duty saved, must be fulfilled within a period of maximum six years.

(178) The EPCGS licence holder can also source the capital goods indigenously. In such case, the indigenous manufacturer of capital goods may avail itself of the benefit for duty free import of components required to manufacture such capital goods. Alternatively, the indigenous manufacturer can claim the benefit of deemed export in respect of supply of capital goods to an EPCGS licence holder.

(179) The EPCGS provides subsidies within the meaning of Article 3(1)(a)(ii) and Article 3(2) of the basic Regulation. The duty reduction constitutes a financial contribution by the GOI, since this concession decreases the GOI’s duty revenue which would be otherwise due. In addition, the duty reduction confers a benefit upon the exporter, because the duties saved upon importation improve the company’s liquidity.

(180) Furthermore, the EPCGS is contingent in law upon export performance, since such licences cannot be obtained without a commitment to export. Therefore, it is deemed to be specific and countervailable under Article 4(4), first subparagraph, point (a) of the basic Regulation.

(181) The EPCGS cannot be considered a permissible duty drawback system or substitution drawback system within the meaning of Article 3(1)(a)(ii) of the basic Regulation. Capital goods are not covered by the scope of such permissible systems, as set out in Annex I point (I), of the basic Regulation, because they are not consumed in the production of the exported products.

(182) The amount of countervailable subsidies was calculated, in accordance with Article 7(3) of the basic Regulation, on the basis of the unpaid customs duty on imported capital goods spread across a period which reflects the normal depreciation period of such capital goods in the industry concerned. The amount so calculated, which is attributable to the IP, has been adjusted by adding interest during this period in order to reflect the full time value of the money. The commercial interest rate during the investigation period in India was considered appropriate for this purpose.

(183) In accordance with Article 7(1)(a) of the basic Regulation, fees incurred by the companies to obtain the subsidy were deducted from the total subsidy amount where claimed.

(184) In accordance with Article 7(2) and 7(3) of the basic Regulation, this subsidy amount has been allocated over the appropriate export turnover during the IP as the appropriate denominator because the subsidy is contingent upon export performance and was not granted by reference to the quantities manufactured, produced, exported or transported. In case of one of the Indian companies, the export turnover of the product under investigation was used as denominator, as the company uses machines purchased under the EPCGS only for the production of the product concerned.

(185) One of the Indian exporting producers claimed an adjustment for the export turnover used as denominator in the calculations. The company argued that they have just started production in the IP and reached only 15 % of their capacity. Therefore, the company requested extrapolation of their export turnover to consider full utilization of their capacity.

(186) However, the calculation of the subsidy rates is always based on actual turnovers. It cannot be assumed that after start-up phase the company will use its capacity fully. Also, the ratio of future split between domestic and export turnover would be just a speculation. Therefore, this claim was rejected.

(187) Following final disclosure, the company reiterated this claim, emphasizing the fact that the EPCGS is a non-recurring subsidy and therefore a calculation without adjustment of the denominator does not reflect correctly the benefit granted to the company, which is in the start-up phase of the operations.

(188) The EPCGS is indeed a non-recurring subsidy and it was treated by the Commission as such: the amount of benefit under the scheme was allocated to the IP taking into account the depreciation period of the capital goods in question. However, the Commission cannot adjust the denominator, making assumptions with regard to the potential export turnover of the company, as already highlighted in recital (186) above. Therefore, the calculation methodology is upheld.

(189) The subsidy rate established with regard to this scheme amounted to 5,69 % for Chromeni and 0,36 % for Jindal Group as allocated for the IP.

(190) The Commission established that two Indian exporting producers used the MEIS during the IP.

(191) The detailed description of the MEIS is contained in chapter 3 of FTP 2015-20 and updated FTP 2015-20 and in chapter 3 of HOP 2015-20 and updated HOP 2015-20.

(192) Any manufacturer-exporter or merchant-exporter is eligible for this scheme.

(193) Eligible companies can benefit from the MEIS by exporting specific products to specific countries which are categorised into Group A (‘Traditional Markets’ including all EU Member States), Group B (‘Emerging and Focus Markets’) and Group C (‘Other Markets’). The countries falling under each group and the list of products with corresponding reward rates are listed in Appendix 3B of the updated HOP.

(194) The benefit takes the form of a duty credit equivalent to a percentage of the FOB value of the export. The MEIS rate in the IP amounted to 2 % (21).

(195) Pursuant to para 3.06 of the FTP 2015-20 certain types of exports are excluded from the scheme, e.g. exports of imported goods or transhipped goods, deemed exports, service exports and export turnover of units operating under special economic zones/export operating units.

(196) The duty credits under the MEIS are freely transferable and valid for a period of 18 months from the date of issue while the duty credit scrips issued on or after 1 January 2016 shall be valid for a period of 24 months from the date of issue as per paragraph 3.13 of the updated HOP 2015-20.

(197) They can be used for: (i) payment of custom duties on imports of inputs or goods including capital goods, (ii) payment of excise duties on domestic procurement of inputs or goods including capital goods and payment, (iii) payment of service tax on procurement of services.

(198) An application for claiming benefits under the MEIS must be filed online on the Directorate-General of Foreign Trade website. Relevant documentation (shipping bills, bank realisation certificate and proof of landing) must be linked with the online application. The relevant Regional Authority (‘RA’) of the GOI issues the duty credit after scrutiny of the documents. As long as the exporter provides the relevant documentation, the RA has no discretion over the granting of the duty credits.

(199) The MEIS provides subsidies within the meaning of Article 3(1)(a)(ii) and Article 3(2) of the basic Regulation. MEIS duty credit is a financial contribution by the GOI, since the credit will eventually be used to offset import duties paid on capital goods, thus decreasing the GOI's duty revenue which would be otherwise due. In addition, MEIS duty credit confers a benefit upon the exporter who is not subject to the payment of those import duties.

(200) Furthermore, the MEIS is contingent in law upon export performance, and therefore deemed to be specific and countervailable under Article 4(4), first subparagraph, point (a) of the basic Regulation.

(201) It is noted that the MEIS expired after the IP, as of 1 January 2021. However, until the end of 2021, the companies may still apply for the MEIS scripts for the export transactions made in 2020. Furthermore, the companies are still able to use the MEIS script obtained in 2021 to balance import duties due, until 15 September 2023. Thus benefits under this scheme were received during the IP and will continue even after the imposition of measures.

(202) In accordance with Article 3(2) and Article 5 of the basic Regulation, the Commission calculated the amount of countervailable subsidies in terms of the benefit conferred on the recipient, which was found to exist during the IP. In this regard, the Commission established that the benefit is conferred on the recipient at the time when an export transaction is made under this scheme. At this moment, the GOI issues a duty credit which is booked by the exporting producer as an account receivable which can be offset by the exporting producer at any moment. This constitutes a financial contribution within the meaning of Article 3(1)(a)(ii) of the basic Regulation. Once the customs authorities issue an export shipping bill, the GOI has no discretion as to whether or not to grant the subsidy. In the light of the above, the Commission considered appropriate to assess the benefit under the MEIS as being the sum of the amounts earned on export transactions made under this scheme during the IP. The Commission took into account MEIS amounts earned on all the export transactions of the Indian exporting producers, as the companies export only product under investigation and hot-rolled stainless steel products, which are semi-products for the production of product under investigation covered by the same MEIS rates.

(203) In accordance with Article 7(1)(a) of the basic Regulation, fees incurred by the companies to obtain the subsidy were deducted from the total subsidy amount where claimed.

(204) In accordance with Article 7(2) and (3) of the basic Regulation, the Commission allocated this subsidy amount over the export turnover of the companies during the IP as appropriate denominator, because the subsidy is contingent upon export performance, and it was not granted by reference to the quantities manufactured, produced, exported or transported.

(205) The subsidy rate established with regard to this scheme amounted to 1,87 % for Chromeni and 1,92 % for Jindal Group in the IP.

(206) The complainant claimed that the GOI ensures an artificial reduction of costs of key inputs of the local industry by inducing chromium ore mining companies in India through a number of regulatory measures including export restrictions (such as export tax, export licences and involvement of State Trading Enterprises in exports) to provide the chromium ore to the downstream Indian SSCR industry for less than adequate remuneration.

(207) The complainant further claimed that the GOI fully controls the mining sector as regards chromium ore in India. Through its laws and regulations, the GOI sets who extracts the chromium (mining companies subject to a licence). There is also State-ownership and/or presence of the State among the mining companies. Thus, the mining companies are vested with authority by the GOI to pursue the GOI’s policy objectives.

(208) As chromium ore is mainly used for the production of ferrochromium, which is essentially used in the production of stainless steel, that benefit was conferred to the Indian producers of SSCR which produce both ferrochromium and stainless steel.

(209) Mining policy covering chromium ore is administered through the Ministry of Mines. Mineral exports are also administered by the Ministry of Commerce and Industry.

(210) Both the central and regional governments play vital roles in the mining industry including chromium ore mining, by setting national mining policies, standards, guidelines, and criteria, as well as deciding on mining authorisation procedures.

(212) The Commission established that one vertically integrated Indian exporting producer of SSCR purchased chromium ore domestically for the production of ferrochromium, which that producer used for the production of slabs, subsequently for hot-rolled coils, and ultimately for cold-rolled flat products.

(213) The vast majority of the company’s chromium ore purchases in the IP originated from the State-owned Enterprise (‘SOE’) Odisha Mining Corporation (‘OMC’). There were also minor purchases reported from two allegedly private mining companies and one trading company.

(214) The Commission informed the GOI that it might have to resort to the use of facts available under Article 28(1) of the basic Regulation when examining the existence and the extent of the alleged subsidies granted to the SSCR industry including through the provision of chromium ore for less than adequate remuneration.

(215) The Commission requested the GOI in its questionnaire, in the deficiency letter, and during the RCC to provide certain information relating to the suppliers and the functioning of the domestic market of chromium ore in India. These information requests included, among others, questions on the legal and institutional framework, the organization of the chromium ore market, the producers of chromium ore in India, price-setting mechanisms and prices, as well as shareholding of companies.

(216) At initiation, the Commission requested the GOI to forward Appendix B attached to the anti-subsidy questionnaire (questionnaire for chromium ore suppliers) to the top 10 producers and distributors of chromium ore, as well as to any other producers and distributors of chromium ore, which have provided chromium ore to the exporting producers. Appendix B consisted of a word document (‘Appendix B_Input supplier’) and an excel file (‘Appendix B - Input suppliers tables’). No replies to Appendix B were received.

(217) The Commission, in its deficiency letter to the GOI of 25 August 2021, took note of the fact that it had not received any reply to Appendix B of the questionnaire.

(218) During and after the RCC, the Commission informed the GOI that it was still missing information related to the overall production and consumption of chromium ore on the Indian market. The GOI also indicated that it was not able to provide price statistics on Indian domestic prices of the raw material in question. Furthermore, there were remaining open questions on the structure and the players on the market, and whether they were State-owned or private parties. Finally, the Commission was still missing the correct legal basis concerning export taxes on chromium ore.

(219) Therefore, the Commission informed the GOI on 8 December 2021 that it intended to have to resort to the use of facts available under Article 28(1) of the basic Regulation. After this letter, the GOI first provided a very minor part of the missing information, mainly on the structure of the market, the ownership of some of the mining companies and the legal basis for the export tax. The submission of this information consisted of only a few pages, lacking supporting evidence. Then the GOI sent an additional letter objecting to the application of Article 28(1) of the basic Regulation in general, and argued that the Commission should take into account the additional information provided and thus refrain from using facts available.

(220) In reply, the Commission first noted that the GOI had repeatedly failed to provide this information when requested in the course of the investigation and that the additional information was received at a very late stage of the investigation, so that it could not be taken into account. In the meantime, the Commission obtained the relevant missing information on ownership of the mining companies and on export taxes on chromium ore from public sources. Therefore, the Commission found that the GOI failed to provide the necessary information as provided by Article 28(1), first sentence of the basic Regulation and that the information provided by the GOI so late in the investigation could not be used as per the conditions in Article 28(3) of the basic Regulation. In any event, the Commission still had to complement the very little information provided by the GOI with other facts available for the parts that were missing, mainly with respect to price setting as well as the role of the GOI and its influence on suppliers (including private players) on the chromium ore market. Therefore, the Commission maintained that it had to rely on Article 28(1) and resort to the use of facts available.

(221) Following final disclosure, the GOI reiterated its position that the application of Article 28 of the basic Regulation was unwarranted, as all the information requested by the Commission had been provided.

(222) However, as explained in details in recital (220), that information reached the Commission at a very late stage of the investigation or was incomplete. This concerned especially such crucial elements as the structure of the chromium ore market, the methodology for price setting or captive consumption of chromium ore. Therefore, although the Commission used the information provided by the GOI to the extent possible, it also had to revert to additional sources and best facts available.

(223) In order to establish the existence of a countervailable subsidy three elements must be present under Article 3 and 4 of the basic Regulation: (i) a financial contribution (ii) a benefit and (iii) specificity (Article 3 of the basic Regulation).

Mining companies acting as public body

(224) The investigation first assessed whether the GOI provided chromium ore to stainless steel producers through mining companies acting as a ‘public body’. The relevant legal standard and interpretation for this assessment under Article 3(1)(a) and 2(b) of the basic Regulation stem from the WTO jurisprudence on ‘public body’.

(225) According to the relevant WTO case-law (33), a public body is an entity that ‘possesses, exercises or is vested with governmental authority’. A public body inquiry must be conducted on a case-by-case basis, having due regard to ‘the core characteristics and functions of the relevant entity’, that entity's ‘relationship with the government’, and ‘the legal and economic environment prevailing in the country in which the investigated entity operates’. Depending on the specific circumstances of each case, relevant evidence may include: (i) evidence that ‘an entity is, in fact, exercising governmental functions’, especially where such evidence ‘points to a sustained and systematic practice’; (ii) evidence regarding ‘the scope and content of government policies relating to the sector in which the investigated entity operates’; and (iii) evidence that a government exercises ‘meaningful control over an entity and its conduct’. When conducting a public body inquiry, an investigating authority must ‘evaluate and give due consideration to all relevant characteristics of the entity’ and examine all types of evidence that may be pertinent to that evaluation; in doing so, it should avoid ‘focusing exclusively or unduly on any single characteristic without affording due consideration to others that may be relevant’.

(226) In order properly to characterize an entity as a public body in a particular case, it may be relevant to consider ‘whether the functions or conduct [of the entity] are of a kind that are ordinarily classified as governmental in the legal order of the relevant Member’, and the classification and functions of entities within WTO Members generally. Thus, whether the functions or conduct are of a kind that are ordinarily classified as governmental in the legal order of the relevant Member may be a relevant consideration for determining whether or not a specific entity is a public body.

(227) There are many different ways in which government in the narrow sense could provide entities with authority. Accordingly, different types of evidence may be relevant to showing that such authority has been bestowed on a particular entity. Evidence that an entity is, in fact, exercising governmental functions may serve as evidence that it possesses or has been vested with governmental authority, particularly where such evidence points to a sustained and systematic practice.

(228) Evidence that a government exercises meaningful control over an entity and its conduct may serve, in certain circumstances, as evidence that the relevant entity possesses governmental authority and exercises such authority in the performance of governmental functions. Indeed, government ownership of an entity, while not a decisive criterion, may serve, in conjunction with other elements, as evidence. However, the existence of mere formal links between an entity and government in the narrow sense is unlikely to suffice to establish governmental authority. Thus, for example, the mere fact that a government is the majority shareholder of an entity in itself does not demonstrate that the government exercises meaningful control over the conduct of that entity, much less that the government has bestowed it with governmental authority. In some instances, however, where the evidence shows that the formal indicia of government control are manifold, and there is also evidence that such control has been exercised in a meaningful way, then such evidence may permit an inference that the entity concerned is exercising governmental authority.

(229) The central focus of a public body inquiry is not whether the conduct that is alleged to give rise to a financial contribution is logically connected to an identified ‘government function’. In this respect, the legal standard for public body determinations under Article 1.1(a)(1) of the SCM Agreement does not prescribe a connection of a particular degree or nature that must necessarily be established between an identified government function and the particular financial contribution at issue. Rather, the relevant inquiry hinges on the entity engaging in that conduct, its core characteristics, and its relationship with government. This focus on the entity, as opposed to the conduct alleged to give rise to a financial contribution, comports with the fact that a ‘government’ (in the narrow sense) and a ‘public body’ share a ‘degree of commonality or overlap in their essential characteristics’ – i.e. they are both ‘governmental’ in nature.

(230) The nature of an entity's conduct or practice may certainly constitute evidence relevant to a public body inquiry. Indeed, the conduct of an entity – particularly when it points to a ‘sustained and systematic practice’ – is one of the various types of evidence that, depending on the circumstances of each investigation, may shed light on the core characteristics of an entity and its relationship with government in the narrow sense. However, the assessment of such evidence is aimed at answering the central question of whether the entity itself possesses the core characteristics and functions that would qualify it as a public body. For instance, relevant for the assessment as to whether an entity is a public body in the context of Chinese State-owned commercial banks (‘SOCBs’) in DS379 included information showing that: (i) ‘[t]he chief executives of the head offices of the SOCBs are government appointed and the [CCP] retains significant influence in their choice’; and (ii) SOCBs ‘still lack adequate risk management and analytical skills’. This evidence was not limited to SOCBs' lending activity per se, but rather spoke to their organizational features, chains of decision making authority, and overall relationship with the GOC. Thus, the AB in DS379 noted that, while the USDOC did take into account evidence relating to the conduct of SOCBs [‘making loans’], it did so within the framework of its inquiry into the core characteristics of those entities and their relationship with the GOC. These SOCBs exercised governmental functions on behalf of the Chinese Government.

(231) Moreover, the AB has also given importance to the fact that the government in question failed to cooperate during the investigation. Indeed, in DS379, the AB confirmed the USDOC's determination that the SOCBs in the CFS Paper investigation constituted ‘public bodies’ on the following considerations: (i) near complete state-ownership of the banking sector in China; (ii) Article 34 of the Commercial Banking Law, which states that banks are required to ‘carry out their loan business upon the needs of [the] national economy and the social development and under the guidance of State industrial policies’; (iii) record evidence indicating that SOCBs still lack adequate risk management and analytical skills; and (iv) the fact that ‘during [that] investigation the [USDOC] did not receive the evidence necessary to document in a comprehensive manner the process by which loans were requested, granted and evaluated to the paper industry’ (34).

(232) Finally, in order to be considered public bodies, the SOEs at issue would not necessarily have to be controlled by the GOC in every sale of input to downstream producers.

(233) In sum, whether the mining companies in India engaged in supplying chromium ore are ‘public bodies’ should be examined by looking into the core characteristics and functions of those companies, and their relationship with the GOI. Evidence of State-ownership, direct control by the State, GOI’s intervention in the market to achieve certain policy objectives may show, also in a context where there is no cooperation by the government in question, that the mining companies exercise governmental functions on behalf of the GOI.

Core characteristics of the mining companies and their relationship with the GOI

(234) At first, the Commission sought information about State ownership as well as other formal indicia of government control in the State-owned chromium ore miners. For this purpose, the Commission could rely only on the information provided by OMC – the only mining company which was cooperating in the investigation at least at the stage of the RCC verification, and which was the almost exclusive supplier of the Indian exporting producer of SSCR that purchased chromium ore domestically during the IP, as mentioned in recital (212).

(235) The GOI stated that in the IP there were two active State-owned producers of the chromium ore, OMC and Industrial Development Corporation of Orissa Ltd., which accounted for 21 % of the total production, The second public chromium ore mining company only had a minimal output in the IP.

(236) The data of the GOI also referred to six private mining companies, namely Misrilal Mines Ltd., B.C. Mohanty & Sons Ltd, Ferro Alloys Corporation Ltd, Indian Metals and Ferro Alloys Ltd., Balasore Alloys Ltd., and Tata Steel Mining. However, according to publicly available information, four of them are producing chromium ore for their captive use of ferro-chromium, and are thus not active on the free market. Furthermore, the mining lease of the two remaining mining companies lapsed during the IP. Their lease was purchased by Tata Steel Mining to complement the expansion of its own ferrochrome production. The first of these companies still had limited production in the IP (9 % of total production).

(237) As a result the non-captive chromium ore market in India is limited to two SOE mining companies, one of them being a marginal player (0,1 % of total production), which in fact makes OMC the sole supplier of the chromium ore in the free market.

(238) The investigation revealed that OMC is 100 % State-owned. Furthermore, according to the Articles of Association, the Chairman of the Board, Managing Director and one of the Directors are members of the Indian Administrative Service (Government Public Enterprises Department) and one director represents the Government Finance Department. Moreover, according to the Articles of Association of the company, all directors are appointed and paid by the Governor of the Odisha State.

(239) Finally, according to Article 54A of OMC’s Articles of Association, ‘the Governor may from time to time issue such directives and instructions, as he may think fit, in regard to the finances and conduct of the business and affairs of the Company and the Directors shall duly comply with and give effect to such directives or instruction’.

(240) Based on the above, the Commission concluded that the non-captive chromium ore market is dominated by one company, OMC, which is fully State-owned, and also managed and controlled by the State. Indeed, through its ownership, presence in the management of the company as well as the direction of its business decisions, the GOI exercises meaningful control over OMC and its conduct.

Functions of the mining companies in India

(241) The Commission assessed whether the mining companies, and in particular OMC, possess governmental authority and whether they exercise this authority in the performance of governmental functions.

(242) The strong influence of the GOI and the government’s meaningful control over OMC is also reflected in the highly regulated environment with respect to chromium ore that the GOI created in the past years which included export restrictions, combined with mining licensing requirements favouring captive mining, and the exercise of control over the supply and sales prices on the domestic market via State-owned operators. The evidence showed that the mining companies, including OMC as regards chromium ore, abide to the GOI’s policy objectives and thus perform governmental functions.

(243) Already back in 2005, an expert group constituted by the Ministry of steel for formulating guidelines for preferential grant of mining lease, issued a report (the ‘Dang Report’) (35) with a number of relevant findings and recommendations.

(244) At that time it was noted that: ‘Iron ore, manganese ore and chrome ore are critical raw material inputs for the steel industry. Their timely and assured availability in adequate quantity and quality on long term basis is a sine qua non for the rapid and orderly growth of the steel and ferrous industry which is a core sector of the national economy’. (36) ‘ A comparison of the cost of mining with the net realizations from exports at these prices reveals windfall profits by a handful of India chrome exporters, at the cost of conservation of a scarce non-renewable mineral resource. Though, India has less than 1 % of the world known reserves of chrome ore, its share of the global chrome ore trade is highly disproportionate 35 %. In India five principal producers-M/s. TISCO, M/s. Orissa Mining Corporation Ltd., Balasore Alloys Ltd., Ferro Alloys Corporation Ltd. Jindal Strips Ltd. account for over 90 % of production.… In view of the very limited reserves of high grade chrome ore, it appears essential to restrict exports of such natural ore which is much in demand by domestic steel and alloy makers …’ (37) (emphasis added). ‘With only 1 % of the 122 world reserves, Indian Chrome Ore exports are presently a highly disproportionate 35 % of world trade. This is clearly an aberration caused by large profit margins between cost of mining and net export realization. Exports of natural chrome ore need to be stopped altogether.’ (38) (emphasis added). ‘In view of the large spread between mining costs and export prices, Government should consider levy of graded export duties on all exports of chrome including concentrates, if at all permitted.’ (39) ‘In keeping with the purposes of MMDR Act, and as in the case of iron ore, domestic plants requiring chrome ore for production of value added ferro alloys/chromium steels must be given absolute preference in grant of chromium leases.’ (40) ‘ After providing the 1st Preference to producers of Steel, by way of captive/semi-captive mines, it is essential to implement policy measures for encouraging a globally competitive mining industry per se, working to world benchmarks of scientific mining, optimum utilization of all mined material, beneficiation, systematic and time bound prospecting and environmental and bio-diversity preservation. Such professional mining enterprises, whether in the public or private sector, must in the first instance allocate a certain minimum proportion of production (say 70 %) to cater to the needs of domestic users.’ (41) (emphasis added).

(245) The Dang Report thus shows that chromium ore was considered to be a vital resource for the domestic steel industry, that export prices were considered to be too high in comparison with domestic prices, and that in view of keeping reasonable domestic prices, a combination of export restraints and preferential mining leases for captive production was warranted. The Dang Report further shows the GOI’s intention to heavily regulate the chromium ore sector as a ‘core sector of the national economy’.

(246) Furthermore, the report of the Working Group on Steel Industry for the twelfth five year plan, issued in November 2011 (42) states explicitly that: ‘Chromite is used mainly in metallurgical industry in the production of Ferro-alloys, e.g., Ferro-chrome, charge-chrome and silico-chrome which are used as additives in making stainless steel and special alloy steel’. (43) ‘ The steel industry has sought restrictions on exports of chromite ores. The government has put in place a fiscal framework to discourage excessive export of chromite ores ’. (44) (emphasis added). ‘Following are the major recommendations for development of the Chromite sector in India: …. v) Chromite resources in the country are not abundant. The country possesses only 1,8 % of the total chromite ore reserves of the world but exports constitute 30-35 % of the world trade. Therefore, there is an urgent need to conserve this critical input for the use of domestic industry and bring in fiscal measures against exports ’. (45)

(247) Finally, the GOI’s National Mineral Policy of 2019 also states that endeavours shall be made to promote the domestic industry, and that efforts shall be made with respect to mining leases to ensure uninterrupted supply ore to the downstream industry.

(248) The Commission then assessed how this policy intent was carried out in legislative and regulatory terms. First, concerning export restrictions, the GOI took several measures to discourage exports of chromium ore, which can be verified on the Ministry of Steel website (46) and in the OECD Database of Export Restriction on Industrial Raw Materials (‘OECD Database’) (47).

(249) The main measure is an export tax imposed originally in 2008 in the form of a specific duty of 2 000 INR per tonne (48). The form of this tax was changed into an ad valorem duty of 30 % per tonne in 2012 at the start of the 12th Five-Year plan, and remains at this level still now (49). According to the OECD database declared purposed of this measure is ‘Safeguard domestic supply; Promote further processing/value added’.