[Federal Register Volume 66, Number 77 (Friday, April 20, 2001)]
[Notices]
[Pages 20240-20251]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 01-9860]


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DEPARTMENT OF COMMERCE

International Trade Administration

[C-533-821]


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

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

ACTION: Notice of preliminary affirmative countervailing duty 
determination.

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EFFECTIVE DATE: April 20, 2001.

FOR FURTHER INFORMATION CONTACT: Eric B. Greynolds at (202) 482-6071 or 
Robert Copyak (202) 482-2209, 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.

Preliminary Determination

    The Department of Commerce (the Department) preliminarily 
determines that countervailable subsidies are being provided to certain 
producers and exporters of certain hot-rolled carbon steel flat 
products (subject merchandise) from India. For information on the 
estimated countervailing duty rates, please see the ``Suspension of 
Liquidation'' section of this notice.

SUPPLEMENTARY INFORMATION:

Petitioners

    The petition in this investigation was filed by Bethlehem Steel 
Corporation, Gallatin Steel Company, IPSCO Steel Inc., LTV Steel 
Company, Inc., National Steel Corporation, Nucor Corporation, Steel 
Dynamics, Inc., U.S. Steel Group, a unit of USX Corporation, Weirton 
Steel Corporation, Independent Steelworkers Union, and the Independent 
Steelworkers of America (the petitioners).

Case History

    Since the publication of the notice of initiation in the Federal 
Register (see Notice of Initiation of Countervailing Duty 
Investigations: Certain Hot-Rolled Carbon Steel Flat Products from 
Argentina, India, Indonesia, South Africa, and Thailand, 65 FR 77580 
(December 12, 2000) (Initiation Notice), the following events have 
occurred: On December 7, 2000, we issued countervailing duty 
questionnaires to the Government of India (GOI).\1\ On January 26, 
2001, we received questionnaire responses from the Steel Authority of 
India Limited (SAIL), Essar Steel Limited (Essar), Ispat Industries 
Limited (Ispat), the Tata Iron and Steel Company Limited (TISCO), 
(collectively, producers/exporters of subject merchandise), and the 
GOI. Beginning on February 16, 2001, we issued supplemental 
questionnaires to SAIL, Essar, Ispat, TISCO, and the GOI. Beginning on 
March 9, 2001, we received supplemental questionnaire responses from 
the GOI and the producers/exporters of subject merchandise.
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    \1\ Upon the issuance of the questionnaire, we informed the GOI 
that it was the government's responsibility to forward the 
questionnaires to all producers/exporters that shipped subject 
merchandise to the United States during the period of investigation.
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    We note that the GOI's January 26, 2001 questionnaire response 
indicated that Jindal Iron and Steel (Jindal) shipped subject 
merchandise to the United States during the POI. However, we did not 
receive a questionnaire response from Jindal.
    On February 22, 2001, petitioners submitted financial information 
for Ispat and Essar and requested that the Department initiate 
creditworthy investigations for the two companies for fiscal years 1997 
through 2000. In the same submission, petitioners submitted additional 
financial information for SAIL covering fiscal years 1997 and 1998 and 
requested that the Department reverse its decision in the Initiation 
Notice and initiate creditworthy investigations of SAIL for these 
years.
    On January 18, 2001, we issued a partial extension of the due date 
for this preliminary determination from February 7, 2001, to March 26, 
2001. See Certain Hot-Rolled Carbon Steel Flat Products from India, 
Indonesia, South Africa, and Thailand: Extension of Time Limit for 
Preliminary Determinations in Countervailing Duty Investigations, 
(Extension Notice) 66 FR 8199 (January 30, 2001).
    On March 26, 2001, we amended the Extension Notice to take the full 
amount of time to issue this preliminary determination. The extended 
due date is April 13, 2001. See Certain Hot-Rolled Carbon Steel Flat 
Products From India, Indonesia, South Africa, and Thailand:

[[Page 20241]]

Extension of Time Limit for Preliminary Determinations in 
Countervailing Duty Investigations, 66 FR 17525 (April 2, 2001).

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 to be 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.
    In the scope section of the Initiation Notice for this 
investigation, the Department encouraged all parties to submit comments 
regarding product coverage by December 26, 2000. The Department is 
presently considering a request to amend the scope of these 
investigations to exclude a particular specialty steel product. We will 
issue our determination on this request prior to the final 
determination.

The 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).

Injury Test

    Because India is a ``Subsidy Agreement Country'' within the meaning 
of section 701(b) of the Act, the International Trade Commission (ITC) 
is required to determine whether imports of the subject merchandise 
from India materially injure or threaten material injury to a U.S. 
industry. On January 4, 2001, the ITC published its preliminary 
determination finding that there is a reasonable indication that an 
industry in the United States is being materially injured, or 
threatened with material injury, by reason of imports from India of 
subject merchandise. See Hot-Rolled Steel Products from Argentina, 
China, India, Indonesia, Kazakhstan, Netherlands, Romania, South 
Africa, Taiwan, Thailand, and Ukraine, 66 FR 805 (January 4, 2001). 
Alignment With Final Antidumping Duty Determination
    On March 23, 2001, petitioners submitted a letter requesting 
alignment of the final determination in this investigation with the 
final determination in the companion antidumping duty investigation. 
Therefore, in accordance with section 705(a)(1) of the Act, we are 
aligning the final determination in this investigation with the final 
determination in the

[[Page 20242]]

antidumping duty investigation of hot-rolled carbon steel flat products 
from India.

Period of Investigation

    The period of investigation (POI) for which we are measuring 
subsidies is April 1, 1999, through March 31, 2000, which corresponds 
to the period for producers/exporters' most recently completed fiscal 
year.

Use of Facts Available

    Jindal failed to respond to the Department's questionnaire. 
Sections 776(a)(2)(A) and 776(a)(2)(B) of the Act require the use of 
facts available when an interested party withholds information that has 
been requested by the Department, or when an interested party fails to 
provide the information requested in a timely manner and in the form 
required. Jindal failed to provide information explicitly requested by 
the Department; therefore, we must resort to the facts otherwise 
available. Because Jindal failed to provide any requested information, 
sections 782(d) and (e) of the Act are not applicable.
    Section 776(b) of the Act provides that in selecting from among the 
facts available, the Department may use an inference that is adverse to 
the interests of a party if it determines that a party has failed to 
cooperate to the best of its ability. In this investigation, the 
Department requested that all producers/exporters in India that shipped 
subject merchandise to the United States during the POI submit the 
information requested in our initial questionnaire. However, Jindal, a 
producer/exporter that shipped subject merchandise to the United States 
during the POI, did not participate in the investigation.
    The Department finds that by not providing the necessary 
information specifically requested by the Department and by failing to 
participate in any respect in this investigation, Jindal has failed to 
cooperate to the best of its ability. Therefore, in selecting facts 
available, the Department determines that an adverse inference is 
warranted.
    Section 776(b) of the Act indicates that, when employing an adverse 
inference, the Department may rely upon information derived from (1) 
the petition; (2) a final determination in a countervailing duty or an 
antidumping investigation; (3) any previous administrative review, new 
shipper review, expedited antidumping review, section 753 review; or 
(4) any other information placed on the record. See also 19 CFR 
Sec. 351.308(c). As adverse facts available in this preliminary 
determination, we have calculated Jindal's net subsidy rate by taking 
the sum of the highest company-specific rates calculated under each 
program. We note that, in determining Jindal's adverse facts available 
rate, we did not include in our calculations any net subsidy rates 
stemming from programs that were provided exclusively to public sector 
companies such as under the GOI's loan guarantee program or to a 
particular producer/exporter of subject merchandise such as under the 
GOI's forgiveness of loans to SAIL. In addition, we also did not 
include a subsidy rate for the Steel Development Fund because, 
according to the response of the GOI, Jindal was not eligible for this 
program. We further note that none of the company-specific program 
rates used to derive Jindal's net subsidy rate were determined on the 
basis of facts available.
    For more information on the rate attributed to Jindal, see the 
``Suspension of Liquidation'' section of this preliminary 
determination.

Subsidies Valuation Information

Allocation Period

    Under section 351.524(d)(2) of the CVD Regulations, we will presume 
the allocation period for non-recurring subsidies to be the average 
useful life (AUL) of renewable physical assets for the industry 
concerned, as listed in the Internal Revenue Service's (IRS) 1977 Class 
Life Asset Depreciation Range System, as updated by the Department of 
the Treasury. The presumption will apply unless a party claims and 
establishes that these tables do not reasonably reflect the AUL of the 
renewable physical assets for the company or industry under 
investigation, and the party can establish that the difference between 
the company-specific or country-wide AUL for the industry under 
investigation is significant.
    In this investigation, the Department is examining non-recurring 
subsidies. Regarding non-recurring subsidies, we have allocated, where 
applicable, all of the non-recurring subsidies of the producers/
exporters of subject merchandise over the AUL listed in the IRS tables 
for the steel industry and used in a recently completed administrative 
review for Indian steel companies (see Final Affirmative Countervailing 
Duty Determination: Certain Cut-to-Length Carbon-Quality Steel Plate 
from India, 64 FR 73131 (December 29, 1999) (CTL Plate from India)). 
Therefore, in accordance with section 351.524(d)(2) of the CVD 
Regulations, the Department is using an allocation period of 15 years.

Benchmarks for Loans and Discount Rate

    In accordance with section 351.505(3)(i) of the CVD Regulations, 
for those programs requiring the application of a short-term benchmark 
interest rate, we used company-specific, short-term interest rates on 
commercial loans as reported by producers/exporters of subject 
merchandise. With respect to the rupee-denominated, short-term 
benchmark, we used the weighted-average of the companies' cash credit 
loans. We note that in CTL Plate from India, we found that the cash 
credit loans provide the most comparable type of short-term benchmark 
when calculating the benefit under the GOI's short-term loan programs. 
64 FR at 73137.
    For those programs requiring a rupee-denominated discount rate or 
the application of a rupee-denominated, long-term benchmark interest 
rate, we used, where available, company-specific, weighted-average 
interest rates on commercial long-term, rupee-denominated loans. We 
note that some producers/exporters of subject merchandise did not have 
rupee-denominated, long-term loans from commercial banks for all 
required years. Therefore, for those years, we had to rely on a rupee-
denominated, long-term benchmark interest rate that is not company-
specific, but provides a reasonable representation of industry 
practice, in order to determine whether a benefit was provided to the 
companies from rupee-denominated, long-term loans received from the 
GOI. Pursuant to 19 CFR Sec. 351.505(a)(3)(iii), we first sought to use 
national average interest rates for those years in which the producer/
exporters did not report company-specific interest rates on comparable 
commercial loans. However, the GOI did not provide in its questionnaire 
response national average interest rates on long-term, rupee-
denominated financing for those years. Therefore, in keeping with the 
Department's past practice, we used as our benchmark in these instances 
the weighted-average interest rates of commercial rupee-denominated, 
long-term loans that were received by the other respondent companies in 
this investigation. This approach is consistent with the Department's 
practice in recent investigations. See e.g., Final Affirmative 
Countervailing Duty Determination: Stainless Steel Sheet and Strip in 
Coils from the Republic of Korea, 64 FR 30636, 30640 (June 8, 1999) and 
Final Affirmative

[[Page 20243]]

Countervailing Duty Determination: Structural Steel Beams From the 
Republic of Korea, 65 FR 41051 (July 3, 2000).
    SAIL used a countervailable program requiring the use of long-term 
interest rate benchmarks that were denominated in foreign currencies. 
Because SAIL did not have any comparable, commercial loans denominated 
in the appropriate foreign currencies, we used currency-specific 
``Lending Rates'' from private creditors as published in the 
International Financial Statistics as the benchmark for SAIL's foreign 
currency loans. See, e.g., CTL Plate from India, 64 FR at 73133. During 
verification, we will seek additional information on interest rates 
charged by commercial banks on foreign currency loans provided within 
India.

Creditworthiness

    In the November 13, 2000 petition and the November 22, 2000 
supplement to the petition, petitioners alleged that SAIL was 
uncreditworthy for the years 1989 through 2000. Based upon the 
information provided by petitioners we initiated creditworthy 
investigations of SAIL for only the fiscal years 1999 and 2000. We 
declined to initiate a creditworthy investigation for the years 1989 
through 1998 because the information provided in the petition did not 
support the allegation that SAIL was uncreditworthy for that period. 
See Initiation Notice, 65 FR 77580, 77583.
    As discussed in the ``Case History'' section of this preliminary 
determination, on February 22, 2001, petitioners submitted additional 
financial information for SAIL covering the years 1997 and 1998 and 
requested that the Department reverse its finding in the Initiation 
Notice and initiate creditworthy investigations of SAIL for these two 
years. Petitioners also alleged on February 22, 2001, that Ispat and 
Essar were uncreditworthy during the years 1997 through 2000.
    Pursuant to section 351.505(a)(4)(i) of the CVD Regulations, the 
Department will generally consider a firm to be uncreditworthy if, 
based on information available at the time of the government-provided 
loan, the firm could not have obtained long-term loans from 
conventional commercial sources. To make this determination, the 
Department may examine, among other factors, the following:
    (A) The receipt by the firm of comparable commercial long-term 
loans;
    (B) The present and past financial health of the firm, as reflected 
in various financial indicators calculated from the firm's financial 
statements and accounts;
    (C) The firm's recent past and present ability to meet its costs 
and fixed financial obligations with its cash flow; and
    (D) Evidence of the firm's future financial position, such as 
market studies, country and industry economic forecasts, and project 
and loan appraisals prepared prior to the agreement between the lender 
and the firm on the terms of the loan.
    With regard to items (B) and (C), above, it is necessary to examine 
financial ratios of a firm not only as they stand alone, but also 
within the context of the industry in which it operates. Petitioners 
have calculated numerous financial ratios for Ispat, Essar and SAIL 
based on the companies' balance sheets during the years in question. 
The Department has confirmed these figures. The key ratios calculated 
and reported by petitioners are debt/equity, total liabilities/net 
worth, fixed assets/net worth, current liabilities/net worth, quick 
ratio and current ratio. However, in our creditworthy analysis we have 
placed little reliance on the debt/equity ratio because the other five 
ratios are more important in determining the solvency and 
creditworthiness of a company.
    As explained in the April 13, 2001, creditworthiness memorandum to 
Melissa G. Skinner, Director of the Office of AD/CVD Enforcement VI, a 
public document on file in the Department's Central Records Unit, Room 
B-099 (Preliminary Creditworthiness Memorandum), for purposes of this 
preliminary determination, we find that SAIL was creditworthy during 
the fiscal years 1999 and 2000 based on the company's financial ratios 
for the period and on the fact that SAIL was able to secure commercial 
financing during fiscal years 1999 and 2000 without the aid of GOI 
guarantees.
    As also explained in the Preliminary Creditworthy Memorandum, the 
information submitted by petitioners is not sufficient to warrant a 
reversal of the Department's decision in the Initiation Notice not to 
initiate a creditworthy investigation of SAIL for fiscal years 1997 and 
1998. As noted in the Preliminary Creditworthy Memorandum, SAIL's 
financial ratios for fiscal years 1997 and 1998 are not indicative of 
an uncreditworthy company. On this basis, we preliminarily find that 
SAIL was creditworthy for fiscal years 1997 and 1998 and, therefore, we 
are not initiating a creditworthy investigation of SAIL for these 
fiscal years.
    Regarding petitioners' allegation that Ispat and Essar were 
uncreditworthy during fiscal years 1997 through 2000, our review of the 
companies' financial ratios do not lead us to conclude that the 
companies were uncreditworthy. Moreover, the companies' financial 
statements as well as their questionnaire responses indicate that they 
were able to secure commercial financing without GOI guarantees during 
the years alleged. For more information, see the Preliminary 
Creditworthy Memorandum. Thus, for purposes of this preliminary 
determination, we find that Ispat and Essar were creditworthy during 
the fiscal years 1997 through 2000.

Programs Preliminarily Determined To Confer Subsidies

1. Pre-shipment and Post-shipment Export Financing
    The Reserve Bank of India (RBI), through commercial banks, provides 
short-term pre-shipment financing, or ``packing credits,'' to 
exporters. Upon presentation of a confirmed export order or letter of 
credit to a bank, companies may receive pre-shipment loans for working 
capital purposes, i.e., for the purchase of raw materials, warehousing, 
packing, 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, and may be 
denominated either in Indian rupees or in foreign currency. 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. Commercial banks extending export credit to Indian 
companies must, by law, charge interest on this credit at rates 
determined by the RBI. During the POI, the rate of interest charged on 
pre-shipment, rupee-denominated export loans up to 180 days was 10.0 
percent. For those loans over 180 days and up to 270 days, banks 
charged interest at 13.0 percent. During the POI, the interest rate 
charged on foreign currency-denominated export loans up to 180 days was 
a rate not to exceed the LIBOR/Euro or LIBOR/Euribor rate plus 1.5 
percent. Any extension of a foreign currency-denominated pre-shipment 
loan outstanding during the POI was subject to the same terms and 
conditions as were applicable for an extension of rupee-denominated 
packing credit, with an additional cost of two percent above

[[Page 20244]]

the rate for the initial 180-day period prevailing at the time of the 
extension.
    Post-shipment export financing consists of loans in the form of 
discounted trade bills or advances by commercial banks. Exporters 
qualify for this program by presenting their export documents to their 
lending bank. 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. Under the Foreign Exchange Management Act of 1999, 
exporters are required to realize export proceeds within 180 days from 
the date of shipment, which is monitored by the RBI. Post-shipment 
financing is, therefore, a working capital program used to finance 
export receivables. This financing is normally denominated either in 
rupees or in foreign currency, except in those instances when an 
exporter uses foreign currency pre-shipment financing and is then 
restricted to post-shipment export financing denominated in the same 
foreign currency.
    In general, post-shipment loans are granted for a period of no more 
than 180 days. The interest rate charged on these foreign currency 
denominated loans during the POI was LIBOR plus 1.5 percent. For loans 
not repaid within the due date, exporters lose the concessional 
interest rate on this financing.
    The Department has previously found both pre-shipment export 
financing and post-shipment export financing to be countervailable, 
because receipt of export financing under these programs was contingent 
upon export performance and the interest rates under this program were 
lower than the rates the exporters would have paid on comparable 
commercial loans. See, e.g., CTL Plate from India, 64 FR at 73137. No 
new substantive information or evidence of changed circumstances has 
been submitted in this investigation to warrant reconsideration of this 
finding. Therefore, in accordance with section 771(5A)(B) of the Act, 
we continue to find that pre- and post-shipment export financing 
constitute countervailable export subsidies.
    To determine whether a benefit was conferred under the pre-export 
financing program for rupee-denominated loans, we compared the interest 
rate charged on these loans to a rupee-denominated, short-term 
benchmark interest rate, as described in the ``Benchmarks for Loans and 
Discount Rate'' section above. We compared this company-specific 
benchmark rate to the interest rates charged on the producer/exporter's 
pre-shipment rupee loans and found that the interest rates charged were 
lower than the benchmark rates. Therefore, in accordance with section 
771(5)(E)(ii) of the Act, we preliminarily determine that this program 
conferred countervailable benefits on producers/exporters of subject 
merchandise during the POI because the interest rates charged on these 
loans were less than what the companies otherwise would have had to pay 
on comparable short-term commercial loans.
    To calculate the benefit conferred by these pre-shipment loans, we 
compared the actual interest paid on the loans with the amount of 
interest that would have been paid at the benchmark interest rate. 
Where the benchmark interest exceeds the actual interest paid, the 
difference is the benefit. We then divided the total amount of benefit 
by each producer/exporter's total exports. On this basis, we 
preliminarily determine the net countervailable subsidy under the pre-
shipment export financing program to be 0.13 percent ad valorem for 
SAIL, 0.16 percent ad valorem for Essar, 1.28 percent ad valorem for 
Ispat, and 1.21 percent ad valorem for TISCO. As facts available, we 
preliminary determine a rate of 1.28 percent ad valorem for Jindal.
    With regard to rupee-denominated post-shipment loans, we calculated 
the benefit using the same methodology described above. With respect to 
our calculation of the net subsidy rate, respondents have indicated 
that post-shipment financing can be tied to specific exports contracts. 
Therefore, when calculating the net subsidy rate under this program, we 
divided the benefits received by each producer/exporter under this 
program by their respective sales of subject merchandise made to the 
United States during the POI.
    During the POI, SAIL also took out post-shipment export financing 
denominated in U.S. dollars. To determine the benefit conferred by 
SAIL's U.S. dollar-denominated post-shipment financing, we again 
compared the program interest rates to a comparable benchmark interest 
rate. As explained in the ``Benchmarks for Loans and Discount Rate'' 
section above, we used as our benchmark the weighted-average interest 
rate of SAIL's company-specific, U.S. dollar-denominated short-term 
loans received from commercial banks. We compared this company-specific 
benchmark rate to the interest rates charged on SAIL's post-shipment 
U.S. dollar-denominated loans and have determined that the interest 
payments under the program were less than what would have been paid on 
a comparable commercial short-term loan. Because respondents have 
indicated that post-shipment loans are tied to particular shipments, we 
divided SAIL's benefits under this program by its sales of subject 
merchandise to the United States during the POI.
    On this basis, we preliminarily determine the net countervailable 
subsidy under the post-shipment export financing program to be 0.02 
percent ad valorem for SAIL, 0.10 percent ad valorem for Ispat, and 
0.33 percent ad valorem for TISCO. As facts available, we preliminary 
determine a rate of 0.33 percent ad valorem for Jindal.
2. Duty Entitlement Passbook Scheme (DEPS)
    The DEPS formerly was the Passbook Scheme (PBS), which was enacted 
by the GOI on April 1, 1995. Administered under auspices of the 
Directorate General of Foreign Trade (DGFT), the PBS enabled GOI-
designated manufacturers/exporters, upon export of finished goods, to 
earn import duty exemptions in the form of credits which could be used 
to pay customs duties on subsequent imports. The amount of PBS credit 
granted was determined according to the GOI's ``Standard Input/Output 
Norms Schedule'' (SIO Norms), which contains GOI-determined breakdowns 
of inputs needed to produce finished products. Rather than receiving 
cash, companies record their PBS credits in ``passbooks'' and then 
offset import duties on subsequent GOI-approved imports by making debit 
entries in their passbooks.
    The PBS was discontinued on April 1, 1997. In its January 26, 2001, 
response to the Department's original questionnaire, the GOI stated 
that credit available under the PBS had to be utilized by September 30, 
1999, after which date any outstanding credits lapsed. No producer/
exporter reported using this program during the POI.
    India's DEPS was enacted on April 1, 1997, as a successor to the 
PBS. As with PBS, the DEPS enables exporting companies to earn import 
duty exemptions in the form of passbook credits rather than cash. 
Exporting companies may obtain DEPS credits on a pre-export basis or on 
a post-export basis. Eligibility for pre-export DEPS credits is limited 
to manufacturers/exporters that have exported for a three-year period 
prior to applying for the program. The amount of pre-export DEPS 
credits that could be earned during the POI was ten percent of the 
average of total export performance of the applicant during the 
preceding three years. Pre-export DEPS credits are not transferable.

[[Page 20245]]

    All exporters are eligible to earn DEPS credits on a post-export 
basis, provided that the exported product is listed in the GOI's SIO 
Norms. Post-export DEPS credits can be used for any subsequent imports, 
regardless of whether they are consumed in the production of an export 
product. Post-export DEPS credits are valid for 12 months and are 
transferable. With respect to subject merchandise, exporters were 
eligible to earn credits equal to 14 percent of the f.o.b. value of 
their export shipments during the fiscal year ending March 31, 2000. 
During the POI, SAIL, Essar, Ispat, and TISCO all earned post-export 
DEPS credits.
    The criteria regarding the remission, exemption or drawback of 
import duties is set forth in 19 CFR 351.519. Pursuant to this 
provision, the entire amount of an import duty exemption is 
countervailable if the government does not have in place and apply a 
system or procedure to confirm which imports are consumed in the 
production of the exported product and in what amounts, or if the 
government has not carried out an examination of actual imports 
involved to confirm which imports are consumed in the production of the 
exported product.
    In CTL Plate from India, we determined that the DEPS does not meet 
either of these standards. 64 FR at 73134. In that investigation, we 
found that the exporter, upon exportation, submits a listing of inputs 
used to produce the export shipment. Id. at 73134. While some of these 
inputs may be imported items, we found in CTL Plate from India that the 
GOI has no way of knowing whether the inputs were imported or purchased 
domestically. Id. Therefore, we concluded in CTL Plate from India that 
the GOI did not have a system in place for determining whether the 
value of credits issued is equal to the amount of import duties that 
was payable on any imported items which were consumed in the production 
of the export shipment. Id. In addition, we further concluded that the 
GOI does not carry out, nor has it carried out, examinations of actual 
inputs involved. Id.
    Consequently, in CTL Plate from India we determined that under 
section 351.519(a)(4) of the CVD Regulations, the entire amount of 
import duty exemption earned by producers/exporters during the POI 
constitutes a benefit. Id. In addition, we further found that a 
financial contribution, as defined under section 771(5)(D)(ii) of the 
Act, is provided under the program because the GOI provides producers/
exporters with credits for the future payment of import duties. Id. We 
further found in CTL Plate from India that this program can only be 
used by exporters and, therefore, is specific under section 771(5)(A) 
of the Act. Id.
    We note that, in this investigation, the GOI and the producers/
exporters of subject merchandise have claimed that the DEPS is not 
countervailable. However, we find that these claims are not sufficient 
to demonstrate that a different decision is warranted at this time. 
Therefore, for purposes of this preliminary determination, we find that 
the DEPS conferred countervailable export subsidies upon producers/
exporters of subject merchandise during the POI. However, during 
verification we will carefully examine how this program operates.
    We have determined that benefits from the DEPS are conferred as of 
the date of exportation of the shipment for which the pertinent DEPS 
credits are earned rather than the date DEPS credits are used. At that 
time, the amount of the benefit is known by the exporter. The benefit 
to producers/exporters under this program is the total value of DEPS 
import duty exemptions that producers/exporters earned on their export 
shipments of subject merchandise to the United States during the POI. 
We have also determined that the application fees paid by producers/
exporters qualify as an ``* * * application fee, deposit, or similar 
payment paid in order to qualify for, or to receive, the benefit of the 
countervailable subsidy.'' See section 771(6)(A) of the Act. We note 
that this approach is consistent with the methodology employed in CTL 
Plate from India. See 64 at 73134.
    Under 19 CFR Sec. 351.524(c), this program provides a recurring 
benefit because DEPS credits provide exemption from import duties. To 
derive the DEPS program rate, we first calculated the value of the pre- 
and post-export credits that producers/exporters earned for their 
export shipments of subject merchandise to the United States during the 
POI by multiplying the f.o.b. value of each export shipment by 14 
percent, the percentage of DEPS credit allowed under the program for 
exports of subject merchandise. We then subtracted as an allowable 
offset the actual amount of application fees paid for each license in 
accordance with section 771(6) of the Act. Finally, we took this sum 
(the total value of the licenses net of application fees paid) and 
divided it by each producer/exporter's total respective exports of 
subject merchandise to the United States during the POI.
    On this basis, we preliminarily determine the net countervailable 
subsidy from this program to be 10.55 percent ad valorem for SAIL, 6.06 
percent ad valorem for Essar, 14.02 percent ad valorem for Ispat, and 
1.43 percent ad valorem for TISCO. As facts available, we preliminary 
determine a rate of 14.02 percent ad valorem for Jindal.
3. Advance Licenses
    Under India's Duty Exemption Scheme, exporters may also import 
inputs duty-free through the use of import licenses. Using advance 
licenses, companies are able to import inputs ``required for the 
manufacture of goods'' without paying India's basic customs duty. 
Advance intermediate licenses and special imprest licenses are also 
used to import inputs duty-free. The GOI reported that advance 
intermediate licenses and special imprest licenses are not related to 
exports. During the POI, Essar and TISCO used advance licences and 
TISCO also sold some advance licenses. Producers/exporters did not use 
or sell any advance intermediate licenses or special imprest licenses 
during the POI.
    The Department has previously determined that the sale of import 
licenses confers a countervailable export subsidy. See, e.g., CTL Plate 
from India; Certain Iron-Metal Castings from India: Final Results of 
Countervailing Duty Administrative Review, 63 FR 64050 (November 18, 
1998) (1996 Castings) \2\; and Certain Iron-Metal Castings from India: 
Final Results of Countervailing Duty Administrative Review, 62 FR 32297 
(June 13, 1997) (1994 Castings). No new or substantive evidence of 
changed circumstances has been submitted in this proceeding to warrant 
reconsideration of this determination. During the POI, TISCO sold 
advance licenses or portions of advance licenses. Therefore, in 
accordance with section 771(5)(B) of the Act, we preliminarily 
determine that TISCO's sales of advance licenses are countervailable as 
export subsidies.
---------------------------------------------------------------------------

    \2\ The year refers to the period covered by the administrative 
review, not to the date of publication.
---------------------------------------------------------------------------

    Essar and TISCO used advance licenses during the POI. In CTL Plate 
from India, we found that products imported under an advance license 
need not be consumed in the production of the exported product.\3\ 64 
FR at 73134. Furthermore, in CTL Plate from India, we found that, upon 
exportation, the exporter, in order to obtain an advanced license, 
submits a listing of inputs used to produce the export shipment. Id. We

[[Page 20246]]

concluded in CTL Plate from India that, while some of these inputs may 
be imported items, the GOI had no way of knowing whether the inputs 
were imported or purchased domestically. Id. Because we found that the 
GOI then issued the advanced licenses based on this list of inputs, we 
determined in CTL Plate from India that the GOI did not base the 
licenses it issued on the amount of import duties that were payable on 
the imported items that were consumed in the production of the exported 
merchandise. 64 FR at 73135.
---------------------------------------------------------------------------

    \3\ We note that in this investigation, TISCO has reported that 
the GOI does not place any restriction on the use of goods imported 
under the advanced license program.
---------------------------------------------------------------------------

    In addition, we further determined in CTL Plate from India that, 
because the licenses specify ranges of quantities to be imported rather 
than an actual amount of duty exemption that can be claimed, the actual 
value of an advanced license was not known at the time the license was 
issued. Id. Therefore, in CTL Plate from India, we determined that the 
GOI had no system in place to confirm that the inputs are consumed in 
the production of the exported product. Id. In that investigation, we 
further determined that the GOI did not carry out examinations of 
actual inputs involved. Id.
    Consequently, we determined in CTL Plate from India that, pursuant 
to 19 CFR 351.519(a)(4), the entire amount of the import duty exemption 
earned under the advanced license program conferred a benefit. Id. We 
further found that, because only exporters can receive advance 
licenses, the program constituted an export subsidy under section 
771(5A)(B) of the Act and constituted a financial contribution under 
section 771(5)(D)(ii) of the Act in the form of revenue forgone. Id.
    Respondents have stated that some adjustments have been made to 
this program; however, these claims are not sufficient to demonstrate 
that a different decision is warranted at this time. On this basis, we 
continue to determine that the advance license program is a 
countervailable program. However, during verification will we closely 
examine any changes made to the program since CTL Plate from India.
    Under 19 CFR 351.524(c), this program provides a recurring benefit 
because advance licenses provide import duty exemptions. Essar and 
TISCO used advance licenses during the POI on exports of subject 
merchandise to the United States. As in CTL Plate from India, we 
continue to determine that benefits from advance licenses are conferred 
as of the date they are used, not the date of exportation of the export 
shipment for which the pertinent advance license is earned (see 64 FR 
at 73135). We also determine that the application fees paid by Essar 
and TISCO qualify as an ``* * * application fee, deposit, or similar 
payment paid in order to qualify for, or to receive, the benefit of the 
countervailable subsidy'' under section 771(6)(A) of the Act, and, 
therefore, should be treated as an offset to the duty exemptions.
    To calculate the benefits conferred to Essar and TISCO from their 
use of the advance licenses, we first calculated the total amount of 
import duty exemptions realized by Essar and TISCO (net of application 
fees). Regarding TISCO's sale of advanced licenses, we determine that 
the benefit is equal to the revenues (net of application fees) that 
TISCO realized on its sale of the licenses. In CTL Plate from India, we 
found that advance licenses are issued on a shipment-by-shipment basis, 
thereby enabling companies to tie their receipt and sale of advance 
licenses to their sales of subject merchandise to the U.S. Id. 
Accordingly, we divided the total benefits Essar and TISCO received 
under this program by the companies' respective sales of subject 
merchandise to the United States during the POI. On this basis, we 
preliminarily determine the net countervailable subsidy from this 
program to be 1.78 percent ad valorem for Essar and 1.12 percent ad 
valorem for TISCO. As facts available, we preliminary determine a rate 
of 1.78 percent ad valorem for Jindal.
4. Special Import Licenses (SILs)
    During the POI, producers/exporters of subject merchandise sold 
through public auction two types of import licenses--SILs for Quality 
and SILs for Star Trading Houses. SILs for Quality are licenses granted 
to exporters which meet internationally-accepted quality standards for 
their products, such as the IS0 9000 (series) and ISO 14000 (series). 
SILs for Star Trading Houses are licenses granted to exporters that 
meet certain export targets. Both types of SILs permit the holder to 
import products listed on a ``Restricted List of Imports'' in amounts 
up to the face value of the SIL. Under the program, the SILs do not 
exempt or reduce the amount of import duties paid by the importer.
    Producers/exporters reported that they sold SILs during the POI. 
The Department's practice is that the sale of SILs constitutes an 
export subsidy because companies receive these licenses based on their 
status as exporters. See, e.g., CTL Plate from India, 64 FR at 73135. 
No new substantive information or evidence of changed circumstances has 
been submitted in this investigation to warrant reconsideration of this 
determination. Therefore, in accordance with section 771(5A)(B) of the 
Act, we continue to find that this program constitutes a 
countervailable export subsidy, and that the financial contribution in 
the form of the revenue received on the sale of licenses constitutes 
the benefit.
    During the POI, producers/exporters sold numerous SILs. Because the 
receipt of SILs cannot be segregated by type or destination of export, 
we calculated the net subsidy rate by dividing the total amount of 
proceeds each producer/exporter of subject merchandise received from 
its sales of these licenses by its respective total export sales for 
the POI. On this basis, we preliminarily determine the net 
countervailable subsidy to be 0.16 percent ad valorem for SAIL and 0.02 
percent ad valorem for TISCO. As facts available, we preliminary 
determine a rate of 0.16 percent ad valorem for Jindal.
5. Export Promotion Capital Goods Scheme (EPCGS)
    The EPCGS provides for a reduction or exemption of customs duties 
and an exemption from excise taxes on imports of capital goods. Under 
this program, producers may import capital equipment at reduced rates 
of duty by undertaking to earn convertible foreign exchange equal to 
four to five times the value of the capital goods within a period of 
eight years. For failure to meet the export obligation, a company is 
subject to payment of all or part of the duty reduction, depending on 
the extent of the export shortfall, plus penalty interest.
    In CTL Plate from India, we determined that the import duty 
reduction provided under the EPCGS was a countervailable export 
subsidy. Id. No new information or evidence of changed circumstances 
has been provided to warrant a reconsideration of this determination. 
Therefore, we continue to find that import duty reductions provided 
under the EPCGS are countervailable export subsidies.
    Producers/exporters reported that they imported machinery under the 
EPCGS in the years prior to the POI and during the POI. For some of 
their imported machinery, producers/exporters met their export 
requirements. As a result, the GOI completely waived the amount of 
import duties. However, producers/exporters have not completed their 
export requirements for other imports of capital machinery. Therefore, 
although producers/exporters received a reduction in import duties when 
the capital machinery was imported, the final waiver on the potential 
obligation to repay the duties has not yet been made by the GOI.

[[Page 20247]]

    We determine that producers/exporters benefitted in two ways by 
participating in this program. The first benefit to producers/exporters 
is the benefit from the waiver of import duty on imports of capital 
equipment. SAIL was the only producer/exporter of subject merchandise 
to meet some of its export requirements with respect to certain imports 
of capital equipment. Because the GOI has formally waived the unpaid 
duties on those imports, we have treated the full amount of the waived 
duty exemptions as a grant received in the year in which the GOI 
officially granted the waiver. For other imports of capital machinery, 
producers/exporters have not completed their export commitments and the 
final waiver of the potential obligation to repay the duties on those 
imports has not yet been made by the GOI.
    The criteria to be used by the Department in determining whether to 
allocate the benefits from a countervailable subsidy program is 
specified under 19 CFR 351.524. Specifically, recurring benefits are 
not to be allocated but are to be expensed to the year of receipt, 
while non-recurring benefits are to be allocated over time. In this 
investigation, non-recurring benefits will be allocated over 15 years, 
the AUL of assets used by the steel industry as reported in the IRS 
tables.
    Normally, tax benefits are considered to be recurring benefits and 
are expensed in the year of receipt. Since import duties are a type of 
tax, the benefit provided under this program is a tax benefit, and, 
thus, normally would be considered a recurring benefit. However, our 
CVD regulations recognize that, under certain circumstances, it is more 
appropriate to allocate over time the benefits of a program 
traditionally considered a recurring subsidy, rather than to expense 
the benefits in the year of receipt. Section 351.524(c)(2) of the CVD 
regulations provides that a party can claim that a subsidy normally 
treated as a recurring subsidy should be treated as a non-recurring 
subsidy and enumerates the criteria to be used by the Department in 
evaluating such a claim. In the Preamble to our regulations, the 
Department provides an example of when it may be more appropriate to 
consider the benefits of a tax program to be non-recurring benefits, 
and, thus, allocate those benefits over time. Countervailing Duties; 
Final Rule, 63 FR 65348, 65393 (November 25, 1998). We also stated in 
the Preamble to our regulations that, if a government provides an 
import duty exemption tied to major capital equipment purchases, it may 
be reasonable to conclude that, because these duty exemptions are tied 
to capital assets, the benefits from such duty exemptions should be 
considered non-recurring, even though import duty exemptions are on the 
list of recurring subsidies. Id. Because the benefit received from the 
waiver of import duties under the EPCGS is tied to the capital assets 
of SAIL, and, therefore, is just such a benefit, we determine that it 
is appropriate to treat the waiver of duties received by SAIL as a non-
recurring benefit. We note that our approach on this issue is 
consistent with that taken in CTL Plate from India, 64 FR at 73136.
    In their questionnaire responses, producers/exporters reported all 
of the capital equipment imports they made using EPCGS licenses and the 
application fees they paid to obtain their EPCGS licenses. We 
preliminarily determine that the application fees paid by SAIL qualify 
as an ``* * * application fee, deposit, or similar payment paid in 
order to qualify for, or to receive, the benefit of the countervailable 
subsidy.'' See section 771(6)(A) of the Act.
    In order to calculate the benefit received from the waiver of 
SAIL's import duties on its capital equipment imports, we determined 
the total amount of duties waived in each year (net of application 
fees). Consistent with our approach in CTL Plate from India, we 
determine the year of receipt to be the year in which the GOI formally 
waived SAIL's remaining outstanding import duties. See 64 FR at 73136. 
Next, we performed the ``0.5 percent test,'' as prescribed under 19 CFR 
351.524(b)(2) for each year in which the GOI granted SAIL an import 
duty waiver.\4\ Those waivers whose face values exceeded 0.5 percent of 
SAIL's total export sales in the year in which the waivers were granted 
were allocated over 15 years, the AUL used in this investigation, using 
the Department's standard grant allocation methodology.
---------------------------------------------------------------------------

    \4\ Under this section, non-recurring subsidies will be expensed 
in the year of receipt rather than allocated over time if the 
benefit from the non-recurring subsidy is less than 0.5 percent of 
the company's sales.
---------------------------------------------------------------------------

    A second type of benefit conferred under this program involves the 
import duty reductions that producers/exporters received on the imports 
of capital equipment for which producers/exporters have not yet met 
their export requirements. For those capital equipment imports, 
producers/exporters have unpaid duties that will have to be paid to the 
GOI if the export requirements are not met. Therefore, we determine 
that the companies had outstanding contingent liabilities during the 
POI. When a company has an outstanding liability and the repayment of 
that liability is contingent upon subsequent events, our practice is to 
treat any balance on that unpaid liability as an interest-free loan. 
See 19 CFR Sec. 351.505(d)(1).
    We determine that the amount of contingent liability to be treated 
as an interest-free loan is the amount of the import duty reduction or 
exemption for which producers/exporters applied but, as of the end of 
the POI, was not finally waived by the GOI. Accordingly, we determine 
the benefit to be the interest that producers/exporters would have paid 
during the POI had they borrowed the full amount of the duty reduction 
at the time of import. We note that this approach is consistent with 
the methodology employed in CTL Plate from India. See 64 FR at 73136. 
Pursuant to 19 CFR 351.505(d)(1), the benchmark for measuring the 
benefit is a long-term interest rate because the event upon which 
repayment of the duties depends (i.e., the date of expiration of the 
time period for producers/exporters to fulfill their export 
commitments) occurs at a point in time more than one year after the 
date the capital goods were imported.
    To calculate the program rate, we combined, where applicable, the 
sum of the allocated benefits received on waived duties and the 
benefits conferred on producers/exporters in the form of contingent 
liability loans. We then divided each producer/exporter's total benefit 
under the program by its respective total export sales during the POI. 
On this basis, we preliminarily determine the net countervailable 
subsidy from this program to be 0.30 percent ad valorem for SAIL, 1.08 
percent ad valorem for Essar, 16.60 percent ad valorem for Ispat, and 
2.42 percent ad valorem for TISCO. As facts available, we preliminarily 
determine a rate of 16.60 percent ad valorem for Jindal.
6. Loans From the Steel Development Fund (SDF)
    The SDF was established in 1978 during a time when the steel sector 
in India was subject to price and distribution controls. From 1978 
through 1994, India's integrated steel producers, SAIL, TISCO, 
Rashtriya Ispat Nigam Limited (RINL), and India Iron & Steel Company 
Limited (IISCO), were mandated by the GOI to increase the prices for 
the products they sold. The proceeds from the price increases were 
remitted to the SDF. Under the SDF program, companies that contributed 
to the fund are eligible to take out long-term loans at advantageous 
rates.

[[Page 20248]]

    Loans from the SDF are made for the following purposes: (1) 
Financing capital improvements and research and development projects; 
(2) providing funding for rebates to the Small Scale Industries 
Corporations on supplies by those companies; and (3) meeting the 
expenditures of the Economic Research Unit of the Joint Plant Committee 
(JPC).
    The Commission for Iron and Steel, which is known as CI&S, is led 
by the Secretary of the Ministry of Steel. This official is an ex-
officio member of the SDF Managing Committee, and Chairman of the JPC. 
The issuance and administration of loans under the SDF program are 
supervised by the JPC. However, according to the GOI, all of the SDF's 
lending decisions are subject to the review and approval of the SDF 
Managing Committee.
    In CTL Plate from India, we determined that the SDF was financed by 
producer levies and other non-GOI sources. In addition, we determined 
that there was no information on the record of that investigation to 
indicate that the GOI contributed tax revenues, either directly or 
indirectly to the fund, or that the GOI exerted any control over the 
fund. On this basis, we determined that loans under the SDF were not 
countervailable. See CTL Plate from India, 64 FR at 73143.
    However, new information on the record of this investigation has 
led us to reverse the non-countervailable finding we made in CTL Plate 
from India. As stated above, our determination in CTL Plate from India 
was based on the claims of the GOI and SAIL that contributions to the 
SDF were made without the direct or indirect involvement of the 
government. In this investigation, new information from the GOI and the 
producers/exporters of subject merchandise indicate that the levies 
originated from producer price increases that were mandated and 
determined by the JPC. Because the Secretary of the Ministry of Steel, 
in his capacity as the head of the CI&S, acts as an ex-officio member 
and Chairman of the JPC, we determine, for purposes of this preliminary 
determination, that the GOI, through the JPC, has a controlling 
interest in the manner and amount of contributions that are made to the 
SDF.
    In particular, during the period in which the funds for the SDF 
were provided, the GOI controlled the price of steel products in India. 
In order to create the SDF, the GOI, acting through the JPC, mandated 
steel price increases which were earmarked for the SDF. Steel producers 
collected this price increase, which was paid by steel consumers in 
India, and these additional funds were then placed into the SDF as a 
source of concessional financing for the Indian steel industry. 
Therefore, information on the record, information which was not on the 
record in CTL Plate from India, demonstrates that the GOI played a 
direct role in the creation of the SDF by mandating price increases on 
steel products which were authorized for use solely as a source of 
funds for the SDF.
    Under section 771(5)(B) of the Act, a subsidy can be found whenever 
the government makes a financial contribution, when it provides a 
payment to a funding mechanism to provide a financial contribution, or 
when it entrusts or directs a private entity to make a financial 
contribution. We preliminary determine that the GOI directed the 
contribution of funds for the SDF within the meaning of section 
771(5)(B) of the Act, by levying price increases on steel products 
which were routed into the SDF. Furthermore, because the Secretary of 
the Ministry of Steel has a major leadership role in the JPC and the 
SDF Managing Committee, the bodies that issue and administer loans 
under the SDF, we preliminarily determine that the GOI exercises 
control over the way in which funding is disbursed under this program. 
Therefore, we preliminarily determine that loans under the SDF 
constitute a financial contribution within the meaning of section 
771(5)(D)(i) of the Act. According to information from the GOI, 
eligibility for loans from the SDF is limited to steel companies. Thus, 
we also preliminarily determine that loans under this program are 
specific within the meaning of 771(5A)(D)(i) of the Act. SAIL and TISCO 
received loans under the SDF program. However, SAIL has indicated in 
its questionnaire response that it had no outstanding SDF loans with 
interest payments due during the POI. Therefore, we preliminarily 
determine that these loans did not provide a benefit to SAIL during the 
POI. We will examine the terms of the loans in detail during 
verification.
    In order to determine whether TISCO's loans under the SDF program 
conferred a benefit within the meaning of section 771(5)(E)(ii) of the 
Act, we compared the actual interest rates charged to the benchmark 
interest rates that would have been charged on a comparable commercial 
loan. As discussed in the ``Benchmarks for Loans and Discount Rate'' 
section of this preliminary determination, where available we used as 
our benchmark the weighted-average interest rates on TISCO's rupee-
denominated, long-term loans. For those years in which no company-
specific long-term benchmark was available for TISCO, we used the 
weighted-average interest rates of commercial rupee-denominated, long-
term loans that were received by the other producers/exporters of 
subject merchandise. Our comparison of the interest rates indicates 
that the interest rate payments that TISCO made under the SDF program 
were less than what it would have otherwise paid on a comparable 
commercial loan. Thus, we preliminarily determine that the interest 
savings realized under this program conferred a benefit upon TISCO. We 
then divided the total amount of interest savings TISCO obtained under 
this program by TISCO's total sales for the POI. On this basis, we 
preliminarily determine the net countervailable subsidy to be 1.45 
percent ad valorem for TISCO.
7. The GOI's Forgiveness of SDF Loans Issued to SAIL
    In October of 1998, SAIL, which was facing financial problems, 
proposed a turnaround plan to the GOI, through the SDF Managing 
Committee, in which it outlined its financial and business 
restructuring. The goals of the restructuring plan were to restore the 
profitability and competitiveness of the company. In order to achieve 
these goals, SAIL included in its proposal to the GOI provisions for 
the forgiveness of portions of its outstanding SDF debt. As SAIL's 
principal shareholder, the GOI reviewed and approved SAIL's overall 
restructuring plan. However, the approval for the actual forgiveness of 
SAIL's SDF loans lay with the SDF Managing Committee. SAIL has reported 
that on February 17, 2000, the SDF Managing Committee issued a 
resolution in which it waived Rs. 50.73 billion of SAIL's SDF debt. In 
addition, SAIL indicated that it received from the GOI three other 
waivers on its SDF loans in the years immediately preceding the POI.
    As explained above, we have determined that because the Ministry of 
Steel has a major leadership role in the SDF Managing Committee, the 
actions of the SDF Managing Committee are subject to the influence and 
control of the GOI. Therefore, we preliminarily determine that the 
forgiveness of SAIL's Rs. 50.73 billion in SDF debt that took place 
during the POI, as well as the SDF waivers that occurred in prior 
years, constitute a financial contribution within the meaning of 
section 771(5)(D)(i) of the Act. Furthermore, because the waivers of 
the SDF loans were limited to SAIL, we determine that they were 
specific to a particular enterprise within the meaning of section 
771(5A)(D)(i) of the Act.

[[Page 20249]]

    In its questionnaire response, SAIL has claimed that a portion of 
the GOI debt forgiveness it received during the POI was contingent on 
the company assisting its subsidiary, IISCO, with its debts. Thus, SAIL 
argues that this portion of the SDF debt was effectively provided to 
IISCO and, therefore, did not benefit SAIL.
    For purposes of this preliminary determination, we have determined 
that all of the Rs. 50.73 billion in SDF debt forgiveness that SAIL 
received during the POI constitutes a countervailable benefit conferred 
upon SAIL in the form of a grant. Information from the GOI indicates 
that, absent government involvement, SAIL would have borne the burden 
of IISCO's inability to repay its debts. Thus, we preliminarily 
determine that the full amount of the SDF loan waiver provided during 
the POI is attributable to SAIL. We will carefully examine this entire 
transaction during verification.
    To calculate the benefit under this program, we treated the amount 
of debt forgiveness SAIL received in each year under this program as a 
non-recurring grant. For each of those years, we performed the ``0.5 
percent test'' as prescribed under 19 CFR 351.524(b)(2). For those 
grants whose face values were larger than 0.5 percent of SAIL's total 
sales in the year the grant was approved, we allocated the face amounts 
of the grants over 15 years, the AUL applied in this investigation, 
using the Department's standard allocation methodology. We then divided 
the amounts of the benefits attributable to the POI by SAIL's total 
sales during the POI. On this basis, we preliminarily determine the net 
countervailable subsidy to be 6.27 percent ad valorem for SAIL.
8. GOI Forgiveness of Other Loans Issued to SAIL
    In the 1970s, IISCO, a subsidiary of SAIL, was an ailing private 
sector company, the management of which was assumed by SAIL in the 
early 1970s at the direction of the GOI. According to the GOI, pursuant 
to a 1978 Act of Parliament, IISCO was made a wholly-owned subsidiary 
of SAIL. However, IISCO continued to incur losses, and, in order to 
meet its capital expenditures and to finance its debts, the GOI issued 
loans to the company in the late 1980s and early 1990s. According to 
the GOI, these loans were ``routed'' through SAIL. The GOI eventually 
forgave these loans as part of SAIL's financial restructuring package.
    In its questionnaire responses, SAIL has claimed that IISCO was the 
sole recipient of the GOI's debt forgiveness and that SAIL did not 
benefit from the waiver of the GOI loans in any way. However, according 
to the questionnaire response of the GOI, due to IISCO's troubled 
financial situation, IISCO was not able to repay the outstanding debt 
it owed to SAIL. Thus, according to the GOI, IISCO's inability to repay 
its debts meant that SAIL, as the controlling entity of IISCO, was 
``burdened with loans with no prospect of their recovery.'' In order to 
provide relief to SAIL and IISCO, the GOI approved a waiver of SAIL's 
GOI debts in the amount of Rs. 3.81 billion so that SAIL could 
immediately thereafter waive loans in the same amount that IISCO owed 
to SAIL.
    Based on the information provided by the GOI, we preliminarily 
determine that this program conferred countervailable benefits upon 
SAIL. Absent the involvement of the GOI, IISCO would have not been able 
to repay the loans it owed to SAIL. In other words, the actions of the 
GOI enabled SAIL to avoid bad debt expenses. Thus, we preliminarily 
determine that this program constitutes a financial contribution within 
the meaning of section 771(5)(D)(i) of the Act. Furthermore, because 
the waiver of the GOI loans was limited to SAIL, we determine that it 
was specific to a particular enterprise within the meaning of section 
771(5A)(D)(i) of the Act.
    To calculate the benefit under this program, we treated the amount 
of debt forgiveness SAIL received as a non-recurring grant. We then 
performed the ``0.5 percent test,'' as prescribed under section 
351.524(b)(2) of the CVD Regulations. Because the amount of the grant 
was larger than 0.5 percent of SAIL's total sales in the year the debt 
forgiveness was approved, we allocated the face amount of the grant 
over 15 years, the AUL applied in this investigation, using the 
Department's standard allocation methodology. We then divided the 
amount of the benefit attributable to the POI by SAIL's total sales 
during the POI. On this basis, we preliminarily determine the net 
countervailable subsidy to be 0.45 percent ad valorem for SAIL.
9. Loan Guarantees from the GOI
    In its questionnaire response, the GOI reported that it does not 
extend loan guarantees under a particular program. Rather, it provides 
loan guarantees on a case-by-case basis only after companies have 
explained in their loan applications the situation and circumstances 
justifying the guarantee. According to the GOI's response, loan 
guarantees are normally extended to ``Public Sector Companies'' in 
particular industrial sectors. SAIL was the only producer/exporter of 
subject merchandise that reported loans outstanding during the POI on 
which it had received GOI loan guarantees. These long-term loans were 
denominated in several foreign currencies.
    In CTL Plate from India, we determined that the loan guarantees 
issued by the GOI constitute a financial contribution within the 
meaning of section 771(5)(D)(i) of the Act. 64 FR at 73137. In 
addition, in that investigation we determined that the GOI's provision 
of loan guarantees were specific under section 771(5A)(D)(iii)(II) of 
the Act because they were limited to certain companies selected by the 
GOI on an ad hoc basis. 64 FR at 73134. No new information has been 
submitted on the record of this investigation to warrant any 
reconsideration of these findings.
    Under 19 CFR 351.506, a benefit exists from a loan guarantee to the 
extent that the total amount a firm pays for the loan with a 
government-provided guarantee is less than the total amount the firm 
would pay for a comparable commercial loan that the firm could actually 
obtain on the market absent the government-provided guarantee, 
including any differences in guarantee fees. Thus, to determine whether 
a government loan guarantee confers a benefit, we compare the total 
amount paid by the company (i.e., the effective interest and guarantee 
fees) for the loan with the total amount it would have paid for a 
comparable commercial loan.
    Using the foreign currency denominated, long-term interest rate 
benchmark for SAIL that was discussed in the ``Benchmarks for Loans and 
Discount Rate'' section of this preliminary determination, we found 
that the total amounts SAIL paid for its GOI-guaranteed loans were less 
than the total amounts SAIL would have otherwise paid for comparable 
commercial loans. Thus, we preliminarily determine that the loan 
guarantees from the GOI conferred a benefit on SAIL equal to the 
difference between these two amounts. We then divided the benefit SAIL 
received under this program by its total sales for the POI. On this 
basis, we preliminarily determine the net countervailable subsidy from 
this program to be 0.06 percent ad valorem for SAIL.
    SAIL also received several GOI-guarantees on loans that were issued 
by international lending and development institutions. In CTL Plate 
from India, 64 FR at 73137, we did not include in our benefit 
calculations the loans that SAIL received from international lending 
and development institutions. In the

[[Page 20250]]

concurrent CVD investigation of the subject merchandise from South 
Africa, the Department has preliminarily determined that the government 
loan guarantees provided to South African companies on loans from 
international lending and development institutions are countervailable 
to the extent that the guarantee fees charged by the government are 
lower than the fees which would have been charged by commercial banks. 
Based on the decision in CTL Plate, we did not solicit information on 
guarantee fees charged by commercial banks in India. Therefore, we are 
unable to determine whether the GOI guarantees provided to SAIL on 
loans from international lending and development institutions provide a 
countervailable benefit.
    During verification we will gather information on guarantee fees 
charged by commercial banks in India. We will report this benchmark 
information in our verification report and encourage interested parties 
to comment on this issue in their case and rebuttal briefs.
10. Exemption of Export Credit From Interest Taxes
    Under the Interest Tax Act of 1974, a tax is levied on the 
chargable interest accruing to a credit institution in a given year. 
Under Section 28 of the Act, the GOI may exempt any credit institution 
or class of credit institutions, or the interest on any category of 
loan or advances from the levy of the interest tax. Pursuant to this 
section of the Act, the GOI has exempted working capital loans taken 
from banks for supporting exports from the interest tax. Loans obtained 
by producers/exporters of subject merchandise from banks under the pre- 
and post-shipment export financing program are covered by this 
exemption. All producers/exporters of subject merchandise used this 
program.
    In the Final Results of Countervailing Duty Administrative Review: 
Certain Iron-Metal Castings From India, 61 FR 64676, 64686 (December 6, 
1996) (1993 Castings), we determined that, in the absence of this 
program, banks would pass along this interest tax to borrowers in its 
entirety. As a result, in 1993 Castings, 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. We reached the same 
conclusions in Certain Iron-Metal Castings from India: Final Results of 
Countervailing Duty Administrative Review, 65FR 31515, May 18, 2000 
(1997 Castings). No new information or evidence of changed 
circumstances has been submitted in this investigation to warrant 
reconsideration of this finding. Therefore, in accordance with sections 
771(5)(D) and (E) of the Act, we continue to find this program 
countervailable because it results in a financial contribution by the 
government in the form of revenue forgone and provides a benefit to the 
recipient in the amount of the interest tax savings. Moreover, because 
receipt of the interest tax exemption is contingent upon export 
performance, we continue to find the program to be an export subsidy 
under section 771(5A)(B) of the Act.
    To calculate the benefit for each producer/exporter of subject 
merchandise, we first determined the total amount of interest paid by 
each producer/exporter during the POI by adding the interest payments 
made on all pre- and post-shipment export loans. We then multiplied 
this amount by the tax rate to which the interest amount would have 
been subject, if not for the exemption during the POR. In its response, 
the GOI indicated that during the POI the rate of interest tax exempted 
was two percent of the basic interest rate. Next, we divided the 
benefit by the value of each producer/exporter's total exports or total 
exports of subject merchandise to the United States, depending on the 
type of sales to which the export financing was tied. On this basis, we 
preliminarily determine the net countervailable subsidy from this 
program to be 0.01 percent ad valorem for SAIL, less than 0.005 percent 
ad valorem for Essar, 0.05 percent ad valorem for Ispat, and 0.10 
percent ad valorem for TISCO. As facts available, we preliminary 
determine a rate of 0.10 percent ad valorem for Jindal.
    The GOI indicated that pursuant to the Finance Act of 2000, the tax 
exemptions under this program were discontinued as of April 1, 2000. 
However, the GOI has not yet submitted a copy of the Finance Act of 
2000 to substantiate the termination of the program. During 
verification we will seek to confirm whether this program has been 
terminated and whether its termination qualifies as a ``program-wide 
change'' under 19 CFR Sec. 351.526. If we can substantiate during 
verification that there has been a program-wide change, we will adjust 
the cash deposit rates to reflect the termination of this program in 
our final determination.

Program Preliminarily Determined Not To Be Not Used

1. Income Tax Deductions Under Section 80 HHC
2. Grant-In-Aid Reported on SAIL's Annual Reports
    SAIL's Annual Reports for fiscal years 1995 through 1999 indicate 
that the company received ``grant-in-aid'' from the GOI under several 
programs ranging from environmental and labor welfare assistance to 
research and development grants. We conducted the ``0.5 percent test'' 
on each of these grants, as prescribed under 19 CFR Sec. 351.524(b)(2). 
The face amounts of the grants received during the fiscal years 1995 
through 1999 did not exceed 0.5 percent of SAIL's total sales. Thus, we 
determine that these grants would have been expensed in the years of 
receipt. Because any benefits attributable to these grants would not be 
allocable to the POI, we find that the program is not used during the 
POI; therefore, it is not necessary to determine whether these grants 
are countervailable.

Verification

    In accordance with section 782(i) of the Act, we will verify the 
information submitted by respondents prior to making our final 
determination.

Suspension of Liquidation

    In accordance with 703(d)(1)(A)(i) of the Act, we have calculated 
individual rates for the companies under investigation--SAIL, Essar, 
TISCO, Ispat, and 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. We note that we did not include Jindal's 
net subsidy rate in the ``all others'' rate because Jindal's net 
subsidy rate was calculated on the basis of facts available. These 
rates are summarized in the table below:

------------------------------------------------------------------------
                                                       Net subsidy rate
                  Producer/exporter                      (percent  ad
                                                           valorem)
------------------------------------------------------------------------
Steel Authority of India Limited (SAIL).............               17.95
Essar Steel Limited (Essar).........................                9.08
Ispat Industries Limited (Ispat)....................               32.05
Tata Iron and Steel Company Limited (TISCO).........                8.08
Jindal Iron and Steel (Jindal)......................               34.27
All Others..........................................               15.72
------------------------------------------------------------------------


[[Page 20251]]

    In accordance with section 703(d) of the Act, we are directing the 
U.S. Customs Service to suspend liquidation of all entries of the 
subject merchandise from India, which are entered or withdrawn from 
warehouse, for consumption on or after the date of the publication of 
this notice in the Federal Register, and to require a cash deposit or 
bond for such entries of the merchandise in the amounts indicated 
above. This suspension will remain in effect until further notice.

ITC Notification

    In accordance with section 703(f) of the Act, we will notify the 
ITC of our determination. In addition, we are making available to the 
ITC all non-privileged and nonproprietary information relating to this 
investigation. We will allow the ITC access to all privileged and 
business proprietary information in our files, provided the ITC 
confirms that it will not disclose such information, either publicly or 
under an administrative protective order, without the written consent 
of the Assistant Secretary for Import Administration.
    In accordance with section 705(b)(2) of the Act, if our final 
determination is affirmative, the ITC will make its final determination 
within 45 days after the Department makes its final determination.

Public Comment

    In accordance with 19 CFR 351.310, we will hold a public hearing, 
if requested, to afford interested parties an opportunity to comment on 
this preliminary determination. Any requested hearing will be 
tentatively scheduled to be held 57 days from the date of publication 
of the preliminary determination at the U.S. Department of Commerce, 
14th Street and Constitution Avenue, N.W., Washington, D.C. 20230. 
Individuals who wish to request a hearing must submit a written request 
within 30 days of the publication of this notice in the Federal 
Register to the Assistant Secretary for Import Administration, U.S. 
Department of Commerce, Room 1870, 14th Street and Constitution Avenue, 
N.W., Washington, D.C. 20230. Parties should confirm by telephone the 
time, date, and place of the hearing 48 hours before the scheduled 
time.
    Requests for a public hearing should contain: (1) The party's name, 
address, and telephone number; (2) the number of participants; and, (3) 
to the extent practicable, an identification of the arguments to be 
raised at the hearing. In addition, six copies of the business 
proprietary version and six copies of the non-proprietary version of 
the case briefs must be submitted to the Assistant Secretary no later 
than 50 days from the date of publication of the preliminary 
determination. As part of the case brief, parties are encouraged to 
provide a summary of the arguments not to exceed five pages and a table 
of statutes, regulations, and cases cited. Six copies of the business 
proprietary version and six copies of the non-proprietary version of 
the rebuttal briefs must be submitted to the Assistant Secretary no 
later than 5 days from the date of filing of the case briefs. An 
interested party may make an affirmative presentation only on arguments 
included in that party's case or rebuttal briefs. Written arguments 
should be submitted in accordance with 19 CFR 351.309 and will be 
considered if received within the time limits specified above.
    This determination is published pursuant to sections 703(f) and 
777(i) of the Act. Effective January 20, 2001, Bernard T. Carreau is 
fulfilling the duties of the Assistant Secretary for Import 
Administration.

    Dated: April 13, 2001.
Bernard T. Carreau,
Deputy Assistant Secretary for Import Administration.
[FR Doc. 01-9860 Filed 4-19-01; 8:45 am]
BILLING CODE 3510-DS-P