[Federal Register Volume 63, Number 133 (Monday, July 13, 1998)]
[Notices]
[Pages 37534-37539]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 98-18598]


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DEPARTMENT OF COMMERCE

International Trade Administration
[C-533-063]


Certain Iron-Metal Castings from India: Preliminary Results of 
Countervailing Duty Administrative Review

AGENCY: Import Administration, International Trade Administration, 
Department of Commerce.

ACTION: Notice of Preliminary Results of Countervailing Duty 
Administrative Review.

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SUMMARY: The Department of Commerce is conducting an administrative 
review of the countervailing duty order on certain iron-metal castings 
from India. The period covered by this administrative review is January 
1, 1996 through December 31, 1996. For information on the net subsidy 
for each reviewed company, as well as for all non-reviewed companies, 
please see the Preliminary Results of Review section of this notice. If 
the final results remain the same as these preliminary results of 
administrative review, we will instruct the U.S. Customs Service to 
assess countervailing duties as detailed in the Preliminary Results of 
Review section of this notice. Interested parties are invited to 
comment on these preliminary results. (See Public Comment section of 
this notice.)

EFFECTIVE DATE: July 13, 1998.

FOR FURTHER INFORMATION CONTACT: Kristen Johnson or Christopher Cassel, 
Office of CVD/AD Enforcement VI, Import Administration, International 
Trade Administration, U.S. Department of Commerce, 14th Street and 
Constitution Avenue, NW, Washington, D.C. 20230; telephone: (202) 482-
2786.

SUPPLEMENTARY INFORMATION:

Background

    On October 16, 1980, the Department of Commerce (``the 
Department'') published in the Federal Register (45 FR 50739) the 
countervailing duty order on certain iron-metal castings from India. On 
October 2, 1997, the Department published a notice of ``Opportunity to 
Request Administrative Review'' (62 FR 51628) of this countervailing 
duty order. We received timely requests for review, and we initiated a 
review covering the period January 1, 1996 through December 31, 1996, 
on November 26, 1997 (62 FR 63069).
    In accordance with 19 C.F.R. 351.213(b), this review covers only 
those producers or exporters of the subject merchandise for which a 
review was specifically requested. The producers/exporters of the 
subject merchandise for which the review was requested are:

Calcutta Ferrous Ltd.,
Carnation Industries Ltd.,
Commex Corporation,
Crescent Foundry Co. Pvt. Ltd.,
Delta Enterprises,
Dinesh Brothers (P) Ltd.,
Kajaria Iron Castings Pvt. Ltd.,
Kejriwal Iron & Steel Works Pvt. Ltd.,
Metflow Corporation,
Nandikeshwari Iron Foundry Pvt. Ltd.,
Orissa Metal Industries,
Overseas Iron Foundry,
R.B. Agarwalla & Company,
R.B. Agarwalla & Co. Pvt. Ltd.,
RSI Limited,
Seramapore Industries Pvt. Ltd.,
Shree Rama Enterprise,
Shree Uma Foundries,
Siko Exports,
SSL Exports,
Super Iron Foundry,
Uma Iron & Steel, and
Victory Castings Ltd.

Delta Enterprises, Metflow Corporation, Orissa Metal Industries, R.B. 
Agarwalla & Co. Pvt. Ltd., Shree Uma Foundries, Siko Exports, and SSL 
Exports did not export the subject merchandise to the United States 
during the period of review (``POR''). Therefore, these companies have 
not been assigned an individual company rate for this administrative 
review. This review covers 19 programs.
    On November 14, 1997, the Department issued a questionnaire to the 
Government of India (``GOI'') and producers/exporters of the subject 
merchandise. The Department received questionnaire responses from the 
GOI and the producers/exporters of the subject merchandise on January 
13, 1998. The Department issued supplemental questionnaires to the GOI 
and certain producers/exporters of the subject merchandise on March 16 
and 25, 1998, April 30, 1998, and May 14, 1998. The supplemental 
questionnaire responses were received on April 9, 1998, and May 11, 15, 
and 21, 1998.

Applicable Statute and Regulations

    Unless otherwise indicated, all citations to the statute are 
references to the provisions of the Tariff Act of 1930, as amended by 
the Uruguay Round Agreements Act (``URAA'') effective January 1, 1995 
(``the Act''). The Department is conducting this administrative review 
in accordance with section 751(a) of the Act. All citations to the 
Department's regulations reference 19 C.F.R. Part 351, 62 FR 27296 (May 
19, 1997), unless otherwise indicated.

Scope of the Review

    Imports covered by this administrative review are shipments of 
Indian manhole covers and frames, clean-out covers and frames, and 
catch basin grates and frames. These articles are commonly called 
municipal or public works castings and are used for access or drainage 
for public utility, water, and sanitary systems. During the review 
period, such merchandise was classifiable under the Harmonized Tariff 
Schedule (``HTS'') item numbers 7325.10.0010 and 7325.10.0050. The HTS 
item numbers are provided for

[[Page 37535]]

convenience and Customs purposes. The written description remains 
dispositive.

Verification

    As provided in section 782(i) of the Act, we verified information 
submitted by the Government of India and certain producers/exporters of 
the subject merchandise. We followed standard verification procedures, 
including meeting with government and company officials and conducting 
an examination of all relevant accounting and financial records and 
other original source documents. Our verification results are outlined 
in the public versions of the verification reports, which are on file 
in the Central Records Unit (Room B-099 of the Main Commerce Building).

Analysis of Programs

I. Programs Conferring Subsidies

A. Pre-Shipment Export Financing
    The Reserve Bank of India (``RBI''), through commercial banks, 
provides short-term pre-shipment financing, or ``packing credits,'' to 
exporters. Upon presentation of a confirmed export order or letter of 
credit, companies may receive pre-shipment loans for working capital 
purposes, i.e., for the purchase of raw materials and for packing, 
warehousing, and transporting of export merchandise. Exporters may also 
establish pre-shipment credit lines upon which they may draw as needed. 
Credit line limits are established by commercial banks, based upon a 
company's creditworthiness and past export performance. Companies that 
have pre-shipment credit lines typically pay interest on a quarterly 
basis on the outstanding balance of the account at the end of each 
period. In general, packing credits are granted for a period of up to 
180 days.
    Commercial banks extending export credit to Indian companies must, 
by law, charge interest on this credit at rates determined by the RBI. 
During the POR, the rate of interest charged on pre-shipment export 
loans was 13.0 percent. For packing credits not repaid within 180 days, 
banks charged interest at 15.0 percent for the number of days the loan 
was overdue. Exporters would lose the concessional interest rate if the 
loan was not repaid within 270 days. If that occurred, banks were able 
to charge a non-concessional interest rate above 15.0 percent. If the 
pre-shipment loan was outstanding beyond 360 days, banks then charged 
the cash credit rate from the first day of advance of the loan until 
the exports were realized.
    Interest charged under this program must be liquidated with export 
proceeds. If the interest is paid with sources other than foreign 
currency export proceeds, the interest element of the loan is not 
treated as export credit, and is charged at rates applicable to 
domestic credit. During the POR, if a company's exports did not 
materialize, banks charged the cash credit rate plus a penal interest 
rate of two (2.0) percent from the first day of advance of the loan.
    The Department found this program to be an export subsidy, and thus 
countervailable, in prior administrative reviews of this order, because 
receipt of pre-shipment export financing was contingent upon export 
performance, and the interest rates were preferential. See, e.g., Final 
Results of Countervailing Duty Administrative Review: Certain Iron-
Metal Castings From India, 56 FR 41658 (August 22, 1991); Final Results 
of Countervailing Duty Administrative Review: Certain Iron-Metal 
Castings From India, 56 FR 52515 (October 21, 1991); and Final Results 
of Countervailing Duty Administrative Review: Certain Iron-Metal 
Castings From India, 61 FR 64676 (December 6, 1996) (``1987, 1988, and 
1993 Indian Castings Final Results''). No new information or evidence 
of changed circumstances has been submitted in this proceeding to 
warrant reconsideration of this finding. Therefore, in accordance with 
Sec. 771(5A)(B) of the Act, we continue to find that this program 
constitutes an export subsidy.
    To determine the benefit conferred under this program, we compared 
the interest rate charged under the pre-shipment financing program to a 
benchmark interest rate. In conducting this administrative review, we 
learned that of the twelve respondents that received pre-shipment 
financing on which interest was paid during the POR, four had received, 
and paid interest on, commercial short-term working capital loans, 
which were not provided under a GOI program. These companies are: 
Calcutta Ferrous Ltd. (``Calcutta Ferrous''), Crescent Foundry Co. Pvt. 
Ltd. (``Crescent Foundry''), Dinesh Brothers (P) Ltd. (``Dinesh''), and 
Nandikeshwari Iron Foundry Pvt. Ltd. (``Nandikeshwari''). For these 
companies, we used a company-specific benchmark interest rate to 
measure the benefit each company received under the pre-shipment export 
financing scheme.
    For all other respondents, we used as our benchmark the cash credit 
rate. In the 1994 administrative review of this order, the Department 
determined that, in the absence of a company-specific benchmark, the 
most ``comparable'' short-term benchmark to measure the benefit under 
the pre-shipment export financing scheme is the cash credit interest 
rate. See, Final Results of Countervailing Duty Administrative Review: 
Certain Iron-Metal Castings From India, 62 FR 32297 (June 13, 1997) 
(``1994 Indian Castings Final Results''). The cash credit interest rate 
is for domestic working capital finance, and thus comparable to pre-and 
post-shipment export working capital finance. During the POR, this rate 
was 18.44 percent, as reported by the GOI in its April 9, 1998 
questionnaire response.
    We compared either the company-specific benchmark rates or the cash 
credit benchmark rate, as appropriate, to the interest rates charged on 
pre-shipment rupee loans and found that for loans granted under this 
program, the interest rates charged were lower than the benchmark 
rates. Therefore, in accordance with section 771(5)(E)(ii) of the Act, 
this program conferred countervailable benefits during the POR because 
the interest rates charged on these loans were less than what a company 
otherwise would have had to pay on a comparable short-term commercial 
loan.
    To calculate the benefit from the pre-shipment loans, we compared 
the actual interest paid on the loans with the amount of interest that 
would have been paid at the applicable benchmark interest rate. Where 
the benchmark rates exceeded the program rates, the difference between 
those amounts is the benefit.
    If the pre-shipment financing loans were provided solely to finance 
exports of subject merchandise to the United States, we divided the 
benefit derived from those loans by exports of subject merchandise to 
the United States. For all other pre-shipment financing loans, we 
divided the benefit by total exports to all destinations. On this 
basis, we preliminarily determine the net subsidy from this program for 
the producers/exporters of the subject merchandise to be as follows:

------------------------------------------------------------------------
                                                            Net subsidy 
            Net subsidies--producer/exporter              rate-- percent
------------------------------------------------------------------------
Calcutta Ferrous Ltd....................................            0.20
Commex Corporation......................................            0.13
Crescent Foundry Co. Pvt. Ltd...........................            0.08
Dinesh Brothers Pvt. Ltd................................            3.05
Kajaria Iron Castings Pvt. Ltd..........................            0.33
Nandikeshwari Iron Foundry Pvt. Ltd.....................            0.22
R.B. Agarwalla & Company................................            0.34
RSI Limited.............................................            0.37
Seramapore Industries Pvt. Ltd..........................            0.53
Super Iron Foundry......................................            1.11
Uma Iron & Steel........................................            0.34

[[Page 37536]]

                                                                        
Victory Castings Ltd....................................            0.30
------------------------------------------------------------------------

B. Post-Shipment Export Financing
    Post-shipment export financing consists of loans in the form of 
trade bill discounting or advances by commercial banks. The credit 
covers the period from the date of shipment of the goods, to the date 
of realization of export proceeds from the overseas customer. Post-
shipment finance, therefore, is a working capital finance or sales 
finance against receivables. The interest amount owed is deducted from 
the total amount of the bill at the time of discounting by the bank. 
The exporter's account is then credited for the rupee equivalent of the 
net amount.
    In general, post-shipment loans are granted for a period of up to 
90 days. The interest rate charged on these loans was 13.0 percent 
during the POR. For loans not repaid within the negotiated number of 
days (90 days maximum), banks assessed interest at 15.0 percent for the 
number of days the loan was overdue, up to six months from the date of 
shipment. Between February 8, 1996 and October 20, 1996, the RBI 
``freed'' the interest rate charged on loans not repaid within 90 days, 
and allowed banks to charge commercial interest rates on such credit. 
On October 21, 1996, the RBI restored the 15.0 percent interest rate 
for loans due beyond 90 days. For loans not repaid within 180 days, 
exporters would lose the concessional interest rate on this financing, 
and interest would be charged at a commercial rate determined by the 
banks.
    In prior administrative reviews, the Department found this program 
to be an export subsidy because receipt of the post-shipment financing 
was contingent upon export performance, and the interest rates were 
preferential. See, e.g., 1987, 1988, and 1993 Indian Castings Final 
Results. No new information or evidence of changed circumstances has 
been submitted in this proceeding to warrant reconsideration of this 
finding. Therefore, in accordance with section 771(5A)(B) of the Act, 
we continue to find that this program constitutes an export subsidy. 
During the POR, thirteen of the sixteen respondent companies made 
payments on post-shipment loans for exports of subject castings to the 
United States.
    To determine the benefit conferred under this program, we compared 
the interest rate charged under the post-shipment financing program to 
a benchmark interest rate. For Calcutta Ferrous, Crescent Foundry, 
Dinesh, and Nandikeshwari, we used as our benchmark, the company-
specific interest rates, discussed above, to measure the benefit each 
company received under the post-shipment export financing scheme. 
Because the loans under this program are discounted, and the effective 
rate paid by the exporters on these post-shipment loans is a discounted 
rate, we derived discounted benchmark rates from each company's 
respective benchmark interest rate.
    In regard to those respondents for which we did not have a company-
specific benchmark rate, we used as our benchmark, the cash credit rate 
discussed above in the pre-shipment financing section. From the cash 
credit benchmark, we derived a discounted rate of 15.57 percent for 
measuring the benefits conferred by this program.
    We compared either the discounted company-specific benchmark rates 
or the discounted cash credit benchmark rate to the interest rates 
charged on post-shipment loans and found that for loans granted under 
this program, the interest rates charged were lower than the 
benchmarks. Therefore, in accordance with section 771(5)(E)(ii) of the 
Act, this program conferred countervailable benefits during the POR 
where the interest rates charged on the loans were less than what a 
company otherwise would have had to pay on a comparable short-term 
commercial loan.
    To calculate the benefit from these loans, we followed the same 
short-term loan methodology discussed above for pre-shipment financing. 
We divided the benefit by either total exports or exports of the 
subject merchandise to the United States, depending on whether the 
company was able to segregate its post-shipment financing by 
merchandise and destination. For RSI Limited, however, we used as our 
denominator, total exports of subject castings and non-subject castings 
to the United States. On this basis, we preliminarily determine the net 
subsidy from this program for the producers/exporters of the subject 
merchandise to be as follows:

------------------------------------------------------------------------
                                                            Net subsidy 
            Net subsidies--producer/exporter               rate--percent
------------------------------------------------------------------------
Calcutta Ferrous Ltd....................................            0.78
Carnation Industries Ltd................................            0.03
Commex Corporation......................................            0.35
Crescent Foundry Co. Pvt. Ltd...........................            0.31
Dinesh Brothers Pvt. Ltd................................            0.67
Kajaria Iron Castings Pvt. Ltd..........................            0.42
Nandikeshwari Iron Foundry Pvt. Ltd.....................            0.27
R.B. Agarwalla & Company................................            0.35
RSI Limited.............................................            0.20
Seramapore Industries Pvt. Ltd..........................            0.05
Super Iron Foundry......................................            0.12
Uma Iron & Steel........................................            0.53
Victory Castings Ltd....................................            0.40
------------------------------------------------------------------------

C. Post-Shipment Export Credit in Foreign Currency (``PSCFC'')
    On January 1, 1992, the GOI introduced a modified post-shipment 
financing scheme, i.e., Post-Shipment Export Credit in Foreign 
Currency. (The GOI terminated the PSCFC scheme effective February 8, 
1996.) This modified scheme enabled exporters to discount foreign 
currency export bills at foreign currency interest rates linked to the 
London Interbank Offering Interest Rate (``LIBOR''). Loans under this 
financing scheme were not provided to the exporter in the foreign 
currency, but the post-shipment credit liability of the exporter was 
denominated in the foreign currency, which was then liquidated with 
export proceeds in foreign currency. During the POR, PSCFC loans were 
granted for a period of up to 90 days with an interest rate fixed by 
the RBI. The interest amount, calculated at the applicable foreign 
currency interest rate, was deducted from the total amount of the bill 
at the time of discounting by the bank. The exporter's account was then 
credited for the rupee equivalent of the net foreign currency amount. 
During the POR, the interest rate charged on PSCFC loans ranged from 
7.5 percent to 9.5 percent for the negotiated term of the loan (90 days 
maximum). Interest on overdue loans was charged at 9.5 percent until 
January 15, 1996. Thereafter, banks were free to charge commercial 
interest rates on PSCFC loans not repaid within 90 days.
    If the overseas customer defaulted and the export bill could not be 
liquidated with export proceeds, the PSCFC loan was converted into 
rupee credit at the selling foreign exchange rate prevailing on the day 
of liquidation. The exporter was responsible for paying the rupee 
equivalent of the bill at the exchange rate prevailing on the day of 
liquidation by the bank. The interest recovered on the liquidated loan 
was charged at a commercial rate determined by the bank.
    Under the PSCFC program, companies had the option of converting 
their export bills into rupees using either the spot rate of exchange 
or the forward rate of exchange. During the POR, all respondent 
companies, which used the PSCFC program, elected to convert their 
export bills into rupees at the spot rate of exchange. If the bank 
holding the

[[Page 37537]]

export bill, converted at the spot rate, realized an exchange rate gain 
due to exchange rate movements up to the date the bill came due, the 
bank was required, by law, to transfer the gain to the exporter. 
However, if the bank suffered an exchange rate loss, the exporter, by 
law, was obligated to cover that loss. Thus, the bank, in effect, faced 
an exchange rate that was fixed over the ``life of the bill.'' Under 
such circumstances, where the rupee value of the bill--from the bank's 
standpoint--is, in fact, fixed at the time of discount, the rate of 
discount measured in either dollars or rupees is the same. Therefore, 
the PSCFC discount rate can be viewed equivalently as either a dollar-
denominated rate or a rupee-denominated rate. If viewed as a dollar-
denominated rate, no exchange rate adjustment to the rupee-denominated 
benchmark is warranted, because the banks face no exchange rate risk in 
holding the bills. Thus, no matter how the PSCFC discount rate is 
viewed, a rupee-benchmark is appropriate for benefit calculation 
purposes where the exporter opts to convert the exports bills using the 
spot rate of exchange.
    In the 1993 Indian Castings Final Results, the Department found 
this program to be an export subsidy, and thus countervailable, because 
receipt of PSCFC loans was contingent upon export performance, and the 
interest rates were preferential. No new information or evidence of 
changed circumstances has been submitted in this proceeding to warrant 
reconsideration of this finding. Therefore, in accordance with 
Sec. 771(5A)(B) of the Act, we continue to find that this program 
constitutes an export subsidy. During the POR, five of the sixteen 
respondent companies made payments on PSCFC loans for shipments of 
subject castings to the United States.
    To determine the benefit conferred under this program, we compared 
the interest rate charged under the PSCFC to a benchmark interest rate. 
For Calcutta Ferrous, Dinesh, and Nandikeshwari, we used as our 
benchmark, the company-specific interest rates, discussed above, to 
measure the benefit each company received under the PSCFC. Because the 
loans under this program are discounted, and the effective rate paid by 
the exporters on the PSCFC loans is a discounted rate, we derived 
discounted benchmark rates from each company's respective company-
specific benchmark interest rate.
    In regard to those respondents for which we did not have a company-
specific benchmark rate, we used as our benchmark, the cash credit rate 
discussed above in the pre-shipment financing section. From the cash 
credit benchmark, we derived a discounted rate of 15.57 percent for 
measuring the benefits conferred by this program.
    We compared either the company-specific benchmark discounted rates 
or the discounted cash credit benchmark rate to the interest rates 
charged on the PSCFC loans and found that the interest rates charged 
were lower than the benchmarks. Therefore, in accordance with section 
771(5)(E)(ii) of the Act, this program conferred countervailable 
benefits during the POR because the interest rates charged on these 
loans were less than what a company otherwise would have had to pay on 
a comparable short-term commercial loan.
    To calculate the benefit from these loans, we followed the same 
short-term loan methodology discussed above for pre-shipment financing. 
We divided the benefit by either total exports or exports of the 
subject merchandise to the United States, depending on whether the 
company was able to segregate its PSCFC financing by merchandise and 
destination. For RSI Limited, however, we used as our denominator, 
total exports of subject castings and non-subject castings to the 
United States. On this basis, we preliminarily determine the net 
subsidy from this program to be as follows:

------------------------------------------------------------------------
                                                            Net subsidy 
            Net subsidies--producer/exporter               rate--percent
------------------------------------------------------------------------
Calcutta Ferrous Ltd....................................            0.06
Dinesh Brothers Pvt. Ltd................................            0.15
Nandikeshwari Iron Foundry Pvt. Ltd.....................            0.08
R.B. Agarwalla & Company................................            0.11
RSI Limited.............................................            0.08
------------------------------------------------------------------------

    As noted above, the GOI terminated the PSCFC scheme effective 
February 8, 1996. All PSCFC loans received by the five above listed 
companies were repaid in their entirety (principal and interest) during 
the POR. We verified that no residual benefits have been provided or 
received, and there is no evidence that a substitute program has been 
established. Therefore, in determining the cash deposit rates for these 
five castings producers/exporters, we will not include the subsidy 
conferred by this program during the POR.
D. Income Tax Deductions Under Section 80HHC
    Under section 80HHC of the Income Tax Act, the GOI allows exporters 
to deduct profits derived from the export of merchandise from taxable 
income. In prior administrative reviews of this order, the Department 
found this program to be an export subsidy, and thus countervailable, 
because receipt of benefits was contingent upon export performance. 
See, e.g., 1993 Indian Castings Final Results. No new information or 
evidence of changed circumstances has been submitted in this proceeding 
to warrant reconsideration of this finding. Therefore, in accordance 
with section771(5A)(B) of the Act, we continue to find that this 
program constitutes an export subsidy, and that the financial 
contribution in the form of tax revenue not collected, constitutes the 
benefit.
    To calculate the benefit to each company, we subtracted the total 
amount of income tax the company actually paid during the review period 
from the amount of tax the company otherwise would have paid during the 
review period had it not claimed any deductions under section 80HHC. We 
then divided this difference by the value of the company's total 
exports. On this basis, we preliminarily determine the net subsidy from 
this program to be as follows:

------------------------------------------------------------------------
                                                            Net subsidy 
            Net subsidies--producer/exporter               rate--percent
------------------------------------------------------------------------
Calcutta Ferrous Ltd....................................            2.91
Carnation Industries Ltd................................            2.92
Commex Corporation......................................            4.79
Crescent Foundry Co. Pvt. Ltd...........................            4.53
Dinesh Brothers Pvt. Ltd................................            5.31
Kajaria Iron Castings Pvt. Ltd..........................            0.00
Kejriwal Iron & Steel Works Pvt. Ltd....................           11.76
Nandikeshwari Iron Foundry Pvt. Ltd.....................            3.71
Overseas Iron Foundry...................................            3.74
R.B. Agarwalla & Company................................            2.73
RSI Limited.............................................            2.73
Seramapore Industries Pvt. Ltd..........................            4.16
Shree Rama Enterprise...................................           10.85
Super Iron Foundry......................................            1.93
Uma Iron & Steel........................................            0.40
Victory Castings Ltd. 2.91..............................            2.17
------------------------------------------------------------------------

E. Import Mechanisms (Sale of Licenses)
    The GOI allows companies to transfer certain types of import 
licenses to other companies in India. In prior administrative reviews 
of this order, the Department found the sale of these licenses to be an 
export subsidy, and thus countervailable, because companies received 
these licenses based on their status as exporters. See, e.g., 1993 
Indian Castings Final Results. No new information or evidence of 
changed circumstances has been submitted in this proceeding to warrant 
reconsideration of this finding. Therefore, in accordance with section 
771(5A)(B) of the Act, we continue to

[[Page 37538]]

find that this program constitutes an export subsidy, and the financial 
contribution in the form of the revenue received on the sale of 
licenses, constitutes the benefit.
    During the POR, five of the sixteen respondent companies sold 
Special Import Licenses. Because the sale of the Special Import 
Licenses were not tied to specific shipments, we calculated the 
subsidies by dividing the total amount of proceeds a company received 
from the sale of these licenses by the total value of its exports of 
all products to all markets. We preliminarily determine the net subsidy 
from the sale of the Special Import Licenses for these five companies 
to be as follows:

------------------------------------------------------------------------
                                                            Net subsidy 
            Net subsidies--producer/exporter               rate--percent
------------------------------------------------------------------------
Carnation Industries Ltd................................            0.24
Kajaria Iron Castings Pvt. Ltd..........................            0.68
Kejriwal Iron & Steel Works.............................            1.00
RSI Limited.............................................            0.03
Seramapore Industries Pvt. Ltd..........................            0.73
------------------------------------------------------------------------

F. Exemption of Export Credit from Interest Taxes
    Indian commercial banks are required to pay a tax on all interest 
accrued from borrowers. The banks pass along this tax to borrowers in 
its entirety. As of April 1, 1993, the GOI exempted from the interest 
tax all interest accruing to a commercial bank on export-related loans. 
In the 1993 administrative review, we determined that this tax 
exemption is an export subsidy and thus countervailable, because only 
interest accruing on loans and advances made to exporters in the form 
of export credit is exempt from the interest tax. See, 1993 Indian 
Castings Final Results. No new information or evidence of changed 
circumstances has been submitted in this proceeding to warrant 
reconsideration of this finding. Therefore, in accordance with 
Sec. 771(5A)(B) of the Act, we continue to find that this program 
constitutes an export subsidy, and that the financial contribution in 
the form of tax revenue not collected, constitutes the benefit.
    During the POR, thirteen of the sixteen respondent companies made 
interest payments on export-related loans, through the pre- and post-
shipment financing schemes, and thus, were exempt from the interest tax 
under this program. To calculate the benefit to each company, we first 
determined the total amount of interest paid by each producer/exporter 
of subject castings during the POR by adding the interest payments made 
on all pre- and post-shipment export loans. Next, we multiplied this 
amount by three (3.0) percent, the tax rate that the interest would 
have been subject to without the exemption during the POR. We then 
divided the benefit by the value of the company's total exports or 
exports of subject merchandise to the United States, depending on 
whether the export financing was tied to total exports or only exports 
of subject castings to the United States. For RSI Limited, however, to 
determine the benefit conferred from the exemption of interest on the 
company's post-shipment financing, we used as our denominator, total 
exports of subject castings and non-subject castings to the United 
States. On this basis, we preliminarily determine the net subsidy from 
this program to be as follows:

------------------------------------------------------------------------
                                                            Net subsidy 
            Net subsidies--producer/exporter               rate--percent
------------------------------------------------------------------------
Calcutta Ferrous Ltd....................................            0.14
Carnation Industries Ltd................................            0.13
Commex Corporation......................................            0.06
Crescent Foundry Co. Pvt. Ltd...........................            0.06
Dinesh Brothers Pvt. Ltd................................            0.39
Kajaria Iron Castings Pvt. Ltd..........................            0.26
Nandikeshwari Iron Foundry Pvt. Ltd.....................            0.13
R.B. Agarwalla & Company................................            0.11
RSI Limited.............................................            0.22
Seramapore Industries Pvt. Ltd..........................            0.07
Super Iron Foundry......................................            0.16
Uma Iron & Steel........................................            0.11
Victory Castings Ltd.0.14...............................            0.18
------------------------------------------------------------------------

II. Programs Preliminarily Found To Be Not Used

    We examined the following programs and preliminarily find that the 
producers/exporters of the subject merchandise did not apply for or 
receive benefits under these programs during the POR:

1. Market Development Assistance (MDA)
2. Rediscounting of Export Bills Abroad (EBR)
3. International Price Reimbursement Scheme (IPRS)
4. Cash Compensatory Support Program (CCS)
5. Programs Operated by the Small Industries Development Bank of India 
(SIDBI)
6. Export Promotion Replenishment Scheme (EPRS) (IPRS Replacement)
7. Export Promotion Capital Goods Scheme
8. Benefits for Export Oriented Units and Export Processing Zones
9. Special Imprest Licenses
10. Special Benefits
11. Duty Drawback on Excise Taxes
12. Payment of Premium Against Advance Licenses
13. Pre-Shipment Export Financing in Foreign Currency (PCFC).

Preliminary Results of Review

    In accordance with 19 C.F.R. Sec. 351.221(b)(4)(i), we calculated 
an individual subsidy rate for each producer/exporter subject to this 
administrative review. For the period January 1, 1996 through December 
31, 1996, we preliminarily determine the net subsidy for the reviewed 
companies to be as follows:

------------------------------------------------------------------------
                                                            Net subsidy 
            Net subsidies--producer/exporter               rate--percent
------------------------------------------------------------------------
Calcutta Ferrous Ltd....................................            4.09
Carnation Industries Ltd................................            3.32
Commex Corporation......................................            5.33
Crescent Foundry Co. Pvt. Ltd...........................            4.98
Dinesh Brothers Pvt. Ltd................................            9.57
Kajaria Iron Castings Pvt. Ltd..........................            1.69
Kejriwal Iron & Steel Works Pvt. Ltd....................           12.76
Nandikeshwari Iron Foundry Pvt. Ltd.....................            4.41
Overseas Iron Foundry...................................            3.74
R.B. Agarwalla & Company Pvt. Ltd.......................            3.64
RSI Limited.............................................            3.63
Seramapore Industries Pvt. Ltd..........................            5.54
Shree Rama Enterprise...................................           10.85
Super Iron Foundry......................................            3.32
Uma Iron & Steel........................................            1.38
Victory Castings Ltd....................................            3.05
------------------------------------------------------------------------

    If the final results of this review remain the same as these 
preliminary results, the Department intends to instruct the U.S. 
Customs Service (``Customs'') to assess countervailing duties as 
indicated above.
    The Department also intends to instruct Customs to collect cash 
deposits of estimated countervailing duties as indicated below, of the 
f.o.b. invoice price on all shipments of the subject merchandise from 
reviewed companies, entered, or withdrawn from warehouse, for 
consumption on or after the date of publication of the final results of 
this review. Because the Post-Shipment Export Credit in Foreign 
Currency program was terminated effective February 8, 1996, we are not 
including the subsidy conferred by this program during the review 
period, in determining the cash deposits to be collected by Customs. We 
preliminarily determine the cash deposit rates for the reviewed 
companies to be as follows:

------------------------------------------------------------------------
                                                            Net subsidy 
            Net Subsidies--Producer/Exporter               rate--percent
------------------------------------------------------------------------
Calcutta Ferrous Ltd....................................            4.03

[[Page 37539]]

                                                                        
Carnation Industries Ltd................................            3.32
Commex Corporation......................................            5.33
Crescent Foundry Co. Pvt. Ltd...........................            4.98
Dinesh Brothers Pvt. Ltd................................            9.42
Kajaria Iron Castings Pvt. Ltd..........................            1.69
Kejriwal Iron & Steel Works Pvt. Ltd....................           12.76
Nandikeshwari Iron Foundry Pvt. Ltd.....................            4.33
Overseas Iron Foundry...................................            3.74
R.B. Agarwalla & Company Pvt. Ltd.......................            3.53
RSI Limited.............................................            3.55
Seramapore Industries Pvt. Ltd..........................            5.54
Shree Rama Enterprise...................................           10.85
Super Iron Foundry......................................            3.32
Uma Iron & Steel........................................            1.38
Victory Castings Ltd....................................            3.05
------------------------------------------------------------------------

    Because the URAA replaced the general rule in favor of a country-
wide rate with a general rule in favor of individual rates for 
investigated and reviewed companies, the procedures for establishing 
countervailing duty rates, including those for non-reviewed companies, 
are now essentially the same as those in antidumping cases, except as 
provided for in section 777A(e)(2)(B) of the Act. The requested review 
will normally cover only those companies specifically named. See 19 
C.F.R. 351.213(b). Pursuant to 19 C.F.R. 351.212(c), for all companies 
for which a review was not requested, duties must be assessed at the 
cash deposit rate, and cash deposits must continue to be collected, at 
the rate previously ordered. As such, the countervailing duty cash 
deposit rate applicable to a company can no longer change, except 
pursuant to a request for a review of that company. See, Federal-Mogul 
Corporation and the Torrington Company v. United States, 822 F.Supp. 
782 (CIT 1993) and Floral Trade Council v. United States, 822 F.Supp. 
766 (CIT 1993) (interpreting 19 C.F.R. 353.22(e) (now 19 C.F.R. 
351.212(c)), the antidumping regulation on automatic assessment, which 
is identical to 19 C.F.R. 355.22(g)). Therefore, the cash deposit rates 
for all companies except those covered by this review will be unchanged 
by the results of this review.
    We will instruct Customs to continue to collect cash deposits for 
non-reviewed companies at the most recent company-specific or country-
wide rate applicable to the company. Accordingly, the cash deposit 
rates that will be applied to non-reviewed companies covered by this 
order will be the rate for that company established in the most 
recently completed administrative proceeding conducted under the URAA. 
See, 1994 Indian Castings Final Results. If such a review has not been 
conducted, the rate established in the most recently completed 
administrative proceeding pursuant to the statutory provisions that 
were in effect prior to the URAA amendments is applicable. See, 1993 
Indian Castings Final Results. These rates shall apply to all non-
reviewed companies until a review of a company assigned these rates is 
requested. In addition, for the period January 1, 1996 through December 
31, 1996, the assessment rates applicable to all non-reviewed companies 
covered by this order are the cash deposit rates in effect at the time 
of entry.

Public Comment

    Pursuant to 19 C.F.R. 351.224(b), the Department will disclose to 
the parties of this proceeding within five days after the date of 
publication of this notice, the calculations performed in this review. 
Interested parties may request a hearing not later than 30 days after 
the date of publication of this notice. Interested parties may submit 
written arguments in case briefs on these preliminary results within 30 
days of the date of publication. Rebuttal briefs, limited to arguments 
raised in case briefs, may be submitted five days after the time limit 
for filing the case brief. Parties who submit argument in this 
proceeding are requested to submit with the argument (1) a statement of 
the issue and (2) a brief summary of the argument. Any hearing, if 
requested, will be held two days after the scheduled date for 
submission of rebuttal briefs. Copies of case briefs and rebuttal 
briefs must be served on interested parties in accordance with 19 
C.F.R. 351.303(f).
    Representatives of parties to the proceeding may request disclosure 
of proprietary information under administrative protective order no 
later than 10 days after the representative's client or employer 
becomes a party to the proceeding, but in no event later than the date 
the case briefs, under 19 C.F.R. 351.309(c)(ii), are due. The 
Department will publish the final results of this administrative 
review, including the results of its analysis of issues raised in any 
case or rebuttal brief or at a hearing.
    This administrative review and notice are issued and published in 
accordance with section 751(a)(1) of the Act (19 U.S.C. 1675(a)(1)), 19 
C.F.R. 351.213.

    Dated: July 6, 1998.
Richard W. Moreland,
Acting Assistant Secretary for Import Administration.
[FR Doc. 98-18598 Filed 7-10-98; 8:45 am]
BILLING CODE 3510-DS-P