01-24404. Final Affirmative Countervailing Duty Determination: Certain Hot-Rolled Carbon Steel Flat Products From India

AGENCY:

Import Administration, International Trade Administration, Department of Commerce.

ACTION:

Notice of final affirmative countervailing duty investigation.

SUMMARY:

On April 20, 2001, the Department of Commerce (the Department) published in the Federal Register its preliminary affirmative determination in the countervailing duty investigation of certain hot-rolled carbon steel flat products from India for the period April 1, 1999 through March 31, 2000.

The net subsidy rates in the Final Determination differ from those of the Preliminary Determination. The revised final net subsidy rates for the investigated companies are listed below in the “Suspension of Liquidation” section of this notice.

EFFECTIVE DATE:

September 28, 2001.

FOR FURTHER INFORMATION CONTACT:

Eric B. Greynolds at [phone] or Robert Copyak at [phone], Office of AD/CVD Enforcement VI, Group II, Import Administration, International Trade Administration, U.S. Department of Commerce, Room 4012, 14th Street and Constitution Avenue, NW., Washington, DC 20230.

SUPPLEMENTARY INFORMATION:

Applicable Statute and Regulations

Unless otherwise indicated, all citations to the statute are references to the provisions effective January 1, 1995, the effective date of the amendments made to the Tariff Act of 1930 (the Act) by the Uruguay Round Agreements Act (URAA). In addition, unless otherwise indicated, all citations to the Department's regulations are to the regulations codified at 19 CFR part 351 (2000).

Background

On April 20, 2001, the Department published the preliminary results of investigation on certain hot-rolled carbon steel flat products from India. See Notice of Preliminary Affirmative Countervailing Duty Determination and Alignment of Final Countervailing Determination with Final Antidumping Duty Determinations: Certain Hot-Rolled Carbon Steel Flat Products from India, 66 FR 20240 (April 20, 2001) (Preliminary Results). This investigation covers the following manufacturer/exporters: Steel Authority of India Limited (SAIL), Essar Steel Limited (Essar), Ispat Industries Limited (Ispat), and the Tata Iron and Steel Company Limited (TISCO). The investigation covers the period April 1, 1999, through March 31, 2000. The investigation covers 10 programs.

We invited interested parties to comment on the Preliminary Determination. On August 20, 2001, we received comments from petitioners and respondents. On August 30, 2001, we received rebuttal comments from petitioners and respondents. At the request of the Department, respondents subsequently submitted revised rebuttal comments on September 6, 2001. A public hearing was held at the Department of Commerce on September 5, 2001.

The Government of India (GOI) submitted a proposed suspension agreement on April 20, 2001. The GOI proposed an agreement again on August 6, 2001. The Department did not accept the GOI's proposals.

Although the deadline for this determination was originally September 17, 2001, in light of the events of September 11, 2001, and the subsequent closure of the Federal Government for reasons of security, the timeframe for issuing this determination has been extended by four days.

Scope of the Investigation

The merchandise subject to this investigation is certain hot-rolled flat-rolled carbon-quality steel products of a rectangular shape, of a width of 0.5 inch or greater, neither clad, plated, nor coated with metal and whether or not painted, varnished, or coated with plastics or other non-metallic substances, in coils (whether or not in successively superimposed layers), regardless of thickness, and in straight lengths, of a thickness of less than 4.75 mm and of a width measuring at least 10 times the thickness. Universal mill plate (i.e., flat-rolled products rolled on four faces or in a closed box pass, of a width exceeding 150 mm, but not exceeding 1250 mm, and of a thickness of not less than 4 mm, not in coils and without patterns in relief) of a thickness not less than 4.0 mm is not included within the scope of this investigation.

Specifically included within the scope of this investigation are vacuum degassed, fully stabilized (commonly referred to as interstitial-free (IF)) steels, high strength low alloy (HSLA) steels, and the substrate for motor lamination steels. IF steels are recognized as low carbon steels with micro-alloying levels of elements such as titanium or niobium (also commonly referred to as columbium), or both, added to stabilize carbon and nitrogen elements. HSLA steels are recognized as steels with micro-alloying levels of elements such as chromium, copper, niobium, vanadium, and molybdenum. The substrate for motor lamination steels contains micro-alloying levels of elements such as silicon and aluminum.

Steel products included in the scope of this investigation, regardless of definitions in the Harmonized Tariff Schedule of the United States (HTS), are products in which: (i) Iron predominates, by weight, over each of the other contained elements; (ii) the carbon content is 2 percent or less, by weight; and (iii) none of the elements listed below exceeds the quantity, by weight, respectively indicated:

1.80 percent of manganese, or

2.25 percent of silicon, or

1.00 percent of copper, or

0.50 percent of aluminum, or

1.25 percent of chromium, or

0.30 percent of cobalt, or

0.40 percent of lead, or

1.25 percent of nickel, or

0.30 percent of tungsten, or

0.10 percent of molybdenum, or

0.10 percent of niobium, or

0.15 percent of vanadium, or

0.15 percent of zirconium.

All products that meet the physical and chemical description provided above are within the scope of this investigation unless otherwise excluded. The following products, by way of example, are outside or specifically excluded from the scope of this investigation:

• Alloy hot-rolled steel products in which at least one of the chemical elements exceeds those listed above (including, e.g., ASTM specifications A543, A387, A514, A517, A506).
• SAE/AISI grades of series 2300 and higher.
• Ball bearings steels, as defined in the HTS.
• Tool steels, as defined in the HTS.
• Silico-manganese (as defined in the HTS) or silicon electrical steel with a silicon level exceeding 2.25 percent.
• ASTM specifications A710 and A736.
• USS Abrasion-resistant steels (USS AR 400, USS AR 500).
• All products (proprietary or otherwise) based on an alloy ASTM specification (sample specifications: ASTM A506, A507).
• Non-rectangular shapes, not in coils, which are the result of having been processed by cutting or stamping and which have assumed the character of articles or products classified outside chapter 72 of the HTS.

The merchandise subject to this investigation is classified in the HTS at subheadings: 7208.10.15.00, 7208.10.30.00, 7208.10.60.00, 7208.25.30.00, 7208.25.60.00, 7208.26.00.30, 7208.26.00.60, 7208.27.00.30, 7208.27.00.60, 7208.36.00.30, 7208.36.00.60, 7208.37.00.30, 7208.37.00.60, 7208.38.00.15, 7208.38.00.30, 7208.38.00.90, 7208.39.00.15, 7208.39.00.30, 7208.39.00.90, 7208.40.60.30, 7208.40.60.60, 7208.53.00.00, 7208.54.00.00, 7208.90.00.00, 7211.14.00.90, 7211.19.15.00, 7211.19.20.00, 7211.19.30.00, 7211.19.45.00, 7211.19.60.00, 7211.19.75.30, 7211.19.75.60, and 7211.19.75.90. Certain hot-rolled flat-rolled carbon-quality steel covered by this investigation, including: vacuum degassed fully stabilized; high strength low alloy; and the substrate for motor lamination steel may also enter under the following tariff numbers: 7225.11.00.00, 7225.19.00.00, 7225.30.30.50, 7225.30.70.00, 7225.40.70.00, 7225.99.00.90, 7226.11.10.00, 7226.11.90.30, 7226.11.90.60, 7226.19.10.00, 7226.19.90.00, 7226.91.50.00, 7226.91.70.00, 7226.91.80.00, and 7226.99.00.00. Subject merchandise may also enter under 7210.70.30.00, 7210.90.90.00, 7211.14.00.30, 7212.40.10.00, 7212.40.50.00, and 7212.50.00.00. Although the HTS subheadings are provided for convenience and U.S. Customs purposes, the Department's written description of the merchandise under investigation is dispositive.

Analysis of Comments Received

All issues raised in the case and rebuttal briefs by parties to this investigation are addressed in the “Issues and Decision Memorandum” (Decision Memorandum) dated September 19, 2001, which is hereby adopted by this notice. A list of issues which parties have raised and to which we have responded, all of which are in the Decision Memorandum, is attached to this notice as Appendix I. Parties can find a complete discussion of all issues raised in this investigation and the corresponding recommendations in this public memorandum which is on file in room B-099 of the Main Commerce Building. In addition, a complete version of the Decision Memorandum can be accessed directly on the World Wide Web at http://www.ia.ita.doc.gov,, under the heading “Federal Register Notices.” The paper copy and electronic version of the Decision Memorandum are identical in content.

Suspension of Liquidation

In accordance with section 705(c)(1)(B)(i)(I) of the Act, we have calculated individual rates for the companies under investigation. For the period April 1, 1999, through March 31, 2000, we determine the net subsidy rates for the investigated companies to be as follows:

Producer/Exporter	Net subsidy rate (percent ad valorem)
Essar Steel Limited (Essar)	8.32
Ispat Industries Limited (Ispat)	31.94
Steel Authority of India Limited (SAIL)	18.38
Tata Iron and Steel Company Limited (TISCO)	9.26
All Others Rate	16.17

As explained in the Decision Memorandum, we have applied the facts available rate to Jindal. To calculate the “all others” rate, we weight-averaged the individual rates of SAIL, Essar, TISCO, and Ispat by each company's respective sales of subject merchandise made to the United States during the POI.

Under § 351.526 of the regulations, the Department can adjust cash deposit rates to account for program-wide changes. During this investigation, the Department verified that two programs have been terminated subsequent to the POI. Therefore, we are adjusting the cash deposit rates to take into account these program-wide changes. Thus, in determining the cash deposit rates listed below, we have deducted the subsidies found for these two programs from the overall subsidy rate calculated for the investigated companies.

Producer/Exporter	Cash deposit rate (percent ad valorem)
Essar Steel Limited (Essar)	8.25
Ispat Industries Limited (Ispat)	31.89
Steel Authority of India Limited (SAIL)	18.22
Tata Iron and Steel Company Limited (TISCO)	9.17
All Others Rate	16.08

In accordance with our preliminary affirmative determination, we instructed the U.S. Customs Service to suspend liquidation of all entries of certain hot-rolled carbon steel flat products from India, which were entered or withdrawn from warehouse, for consumption on or after April 20, 2001, the date of the publication of our preliminary determination in the Federal Register. In accordance with section 703(d) of the Act, we instructed the U.S. Customs Service to discontinue the suspension of liquidation for merchandise entered on or after August 18, 2001, but to continue the suspension of liquidation of entries made between April 20, 2001 and August 17, 2001.

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

ITC Notification

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

If the ITC determines that material injury, or threat of material injury, does not exist, these proceedings will be terminated. If however, the ITC determines that such injury does exist, we will issue a countervailing duty order.

Return or Destruction of Proprietary Information

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

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

Dated: September 21, 2001.

Faryar Shirzad,

Assistant Secretary for Import Administration.

Appendix I—Issues and Decision Memorandum

Methodology and Background Information

I. The Net Subsidy Rate Attributable to Jindal Vijaynagar Ltd.

II. Subsidies Valuation Information

A. Allocation Period

B. Creditworthiness

C. Benchmarks for Loans and Discount Rate

III. Program-Wide Changes

Analysis of Programs

I. Programs Conferring Subsidies

A. Pre-Shipment and Post-Shipment Export Financing

B. Duty Entitlement Passbook Scheme

C. Advance Licenses

D. Special Import Licenses (SILs)

E. Export Promotion Capital Goods Scheme (EPCGS)

F. Loans from the Steel Development Fund (SDF) Fund

G. The GOI's Forgiveness of SDF Loans Issued to SAIL

H. GOI Forgiveness of Other Loans Issued to SAIL

I. Loan Guarantees from the GOI

J. Exemption of Export Credit from Interest Taxes

II. Programs Determined To Be Not Used

A. Income Tax Deductions Under Section 80 HHC

B. Grant-in-Aid Reported on SAIL's Annual Reports

III. Total Ad Valorem Rate

IV. Analysis of Comments

Comment 1: Steel Development Loans and Loan Forgiveness

Comment 2: Attribution of the GOI's Waiver of SAIL's SDF Loans

Comment 3: The Attribution of GOI Debt Forgiveness

Comment 4: Suspension of Interest Payments Due on SAIL's SDF Loans During the POI

Comment 5: Countervailability of Advance Licenses

Comment 6: Countervailability of DEPS

Comment 7: Program-Wide Changes

Comment 8: Income Tax Deductions under Section 80HHC of the Indian Tax Act

Comment 9: Uncreditworthy Allegations

Comment 10: Denominator to be Used for SAIL and Essar's Pre-shipment Export Financing

Comment 11: Long-term Interest Rate Benchmark for Calculating the Benefit to Essar from the Export Promotion Capital Goods Scheme

Comment 12: Sales Tax Obtained from the Sales of Special Import Licenses

Comment 13: Exemption of Export Credit from Interest Tax

Comment 14: Ispat's Uninstalled and Common Capital Equipment under the EPCGS

Comment 15: Ispat's Corrected FOB Sales Values

Comment 16: Value of DEPS Benefits Conferred on Ispat

Comment 17: Petitioners' Allegation of Errors in the Calculation of Ispat's Subsidy Rate

Comment 18: Guarantee Fees Charged by the GOI for Loans Obtained by SAIL from International Lending Institutions

Comment 19: Calculation of TISCO's Long-term Benchmark Interest Rate

Comment 20: Calculation of Duty and Application Fees Actually Paid by TISCO Under the EPCGS Program

Comment 21: Calculation of TISCO's SDF Loan Repayments

Comment 22: Calculation of TISCO's Short-Term Rupee-Denominated Benchmark Interest Rate

Comment 23: Calculation of DEPS Program Rate for TISCO

Comment 24: Benefit to TISCO Under the EPCGS Program

Comment 25: Denominator for TISCO's Post-Shipment Export Financing Program

Comment 26: Calculation of TISCO's SDF Loans