[Federal Register Volume 69, Number 68 (Thursday, April 8, 2004)]
[Notices]
[Pages 18542-18548]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 04-8016]


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DEPARTMENT OF COMMERCE

International Trade Administration

[C-533-825]


Notice of Preliminary Results and Rescission in Part of 
Countervailing Duty Administrative Review: Polyethylene Terephthalate 
Film, Sheet, and Strip From India

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 (the Department) is conducting an 
administrative review of the countervailing duty (CVD) order on 
polyethylene terephthalate film, sheet, and strip (PET film) from 
India. The review covers one company; the period of review (POR) is 
October 22, 2001, through December 31, 2002.\1\ For

[[Page 18543]]

information on the net subsidy rate for the reviewed company, see the 
``Preliminary Results of Administrative Review'' section of this 
notice. If the final results remain the same as the preliminary results 
of this review, we will instruct the U.S. Customs and Border Protection 
(CBP) to assess countervailing duties as detailed in the ``Preliminary 
Results of Administrative Review'' section of this notice. Interested 
parties are invited to comment on these preliminary results. (See the 
``Public Comment'' section of this notice).
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    \1\ For the purposes of these preliminary results, we have 
analyzed data for the period January 1, 2001, through December 31, 
2001, to determine the subsidy rate for exports of subject 
merchandise made during the POR covering 2001. In addition, we have 
analyzed data for the period January 1, 2002, through December 31, 
2002, to determine the subsidy rate for exports during that period. 
Further, we are using the subsidy rate calculated for calendar year 
2002 to establish the cash deposit rate for exports of subject 
merchandise subsequent to the issuance of the final results of this 
administrative review.

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EFFECTIVE DATE: April 8, 2004.

FOR FURTHER INFORMATION CONTACT: Jeff Pedersen at (202) 482-2769 or 
Howard Smith at (202) 482-5193, AD/CVD Enforcement Office IV, Group II, 
Import Administration, International Trade Administration, U.S. 
Department of Commerce, 14th Street and Constitution Avenue, NW., 
Washington, DC 20230.

SUPPLEMENTARY INFORMATION:

Background

    On July 1, 2002, the Department published a CVD order on PET film 
from India. See Notice of Countervailing Duty Order: Polyethylene 
Terephthalate Film, Sheet, and Strip (PET Film) from India, 67 FR 44179 
(July 1, 2002) (PET Film Order). On July 2, 2003, the Department 
published in the Federal Register a notice of opportunity to request an 
administrative review of this order. See Antidumping or Countervailing 
Duty Order, Finding, or Suspended Investigation; Opportunity to Request 
Administrative Review, 68 FR 39511 (July 2, 2003). On July 31, 2003, 
Dupont Teijin Films, Mitsubishi Polyester Film of America, Toray 
Plastics (America) and SKC America, Inc. (the petitioners), requested 
that the Department conduct an administrative review of the CVD order 
on PET film from India with respect to Polyplex Corporation Ltd. 
(Polyplex). Also, on July 31, 2003, Polyplex, Garware Polyester Limited 
and Global Pet Films (Garware), and Jindal Polyester Limited (Jindal), 
Indian producers and exporters of subject merchandise, requested that 
the Department conduct an administrative review of the CVD order on PET 
film from India with respect to their exports to the United States. 
Finally, on July 31, 2003, Valencia Specialty Films, Inc. (Valencia), a 
U.S. importer of subject merchandise, requested that the Department 
conduct an administrative review of the CVD order on PET film from 
India with respect to Jindal's exports to the United States. On August 
22, 2003, the Department initiated an administrative review of the CVD 
order on PET film from India covering Garware, Jindal and Polyplex, and 
the period October 22, 2001, through December 31, 2002. See Initiation 
of Antidumping and Countervailing Duty Administrative Reviews and 
Requests for Revocation in Part, 68 FR 50750 (August 22, 2003).
    On August 6, 2003, Jindal requested that the Department change the 
POR to either April 1, 2002, through March 31, 2003 (its fiscal year), 
or January 1, 2002, through March 31, 2003,\2\ in order to facilitate 
the reporting of the information requested by the Department. 
Similarly, on August 19, 2003, August 22, 2003, and September 24, 2003, 
Polyplex argued that the Department should alter the POR to take into 
account the April through March fiscal year used by the Government of 
India (GOI) and most Indian companies. On September 26, 2003, the 
Department denied the companies' request for a change in the POR. See 
letters from the Department to Jindal and Polyplex regarding request 
for a different period of review, on file in the Central Records Unit 
(CRU), room B-099 of the main Commerce building.
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    \2\ In its August 6, 2003, request, Jindal noted that the 
Department's notice of opportunity to request an administrative 
review identified the POR as the period January 1, 2002, through 
December 31, 2002. We acknowledge that the information provided in 
the notice was incorrect. The opportunity notice should have 
identified the POR as the period October 22, 2001, through December 
31, 2002.
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    On August 20, 2003, the Department issued questionnaires to the GOI 
and Polyplex. We received responses from Polyplex on October 9, 2003, 
and from the GOI on October 23, 2003. In November and December 2003, 
and February and March 2004, the Department issued supplemental 
questionnaires to Polyplex. Polyplex provided timely responses. Also, 
petitioners submitted comments regarding the questionnaire responses in 
October and November 2003.
    On August 21, 2003, Garware withdrew its request for an 
administrative review of its exports. Jindal and Valencia, on September 
25, 2003, and October 8, 2003, respectively, also withdrew their 
requests for an administrative review of Jindal. Because no other 
interested parties requested administrative reviews these companies, as 
explained in the ``Partial Rescission of Review'' section below, we are 
rescinding the administrative reviews of these companies.
    On February 19, 2004, the GOI requested that the Department change 
the POR to the period April 1, 2002, through March 31, 2003. For the 
reasons stated in our letters to Jindal and Polyplex, we are denying 
the GOI's request to change the POR.
    In accordance with 19 CFR 351.213(b), this administrative review 
covers only those producers or exporters for which a review was 
specifically requested. Polyplex is the only company subject to this 
review. This review covers 14 programs.

Scope of the Review

    For purposes of this review, the products covered are all gauges of 
raw, pretreated, or primed PET film, whether extruded or coextruded. 
Excluded are metallized films and other finished films that have had at 
least one of their surfaces modified by the application of a 
performance-enhancing resinous or inorganic layer of more than 0.00001 
inches thick. Imports of PET film are classifiable in the Harmonized 
Tariff Schedule of the United States (HTSUS) under item number 
3920.62.00. HTSUS subheadings are provided for convenience and customs 
purposes. The written description of the scope of this proceeding is 
dispositive.

Partial Rescission of Review

    As provided in 19 CFR 351.213(d)(1), ``the Secretary will rescind 
an administrative review under this section, in whole or in part, if a 
party that requested a review withdraws the request within 90 days of 
the date of publication of notice of initiation of the requested 
review.'' Jindal and Garware withdrew their requests for an 
administrative review of their respective companies and Valencia 
withdrew its request for an administrative review of Jindal within 90 
days of the date of publication of the notice of initiation of the 
instant administrative review. Additionally, no other party requested 
an administrative review of Jindal or Garware. Therefore, the 
Department is rescinding the administrative review with respect to 
Jindal and Garware.

Subsidies Valuation Information

Allocation Period

    In the investigative segment of this proceeding, the Department 
determined that Polyplex's non-recurring subsidies should be allocated 
over an average useful life (AUL) of 18 years. Because there is no new 
evidence on the record that would cause the Department to

[[Page 18544]]

reconsider this decision, in this review the Department will continue 
to use an AUL of 18 years in allocating Polyplex's non-recurring 
subsidies.

Benchmarks for Loans and Discount Rate

Benchmark for Short-Term Loans

    In accordance with 19 CFR 351.505(a)(3)(i), and consistent with the 
underlying investigation, for those programs requiring the application 
of a short-term benchmark interest rate, we used as the benchmark the 
company-specific, short-term interest rates on commercial loans as 
reported by Polyplex. In calculating the benefit for pre-shipment 
export financing, we used as the rupee-denominated, short-term 
benchmark the weighted-average rate of the company's cash credit loans. 
The Department has found that cash credit loans are the most comparable 
type of short-term loans and the rate of these loans is appropriate for 
use as a benchmark because, like pre-shipment export financing, cash 
credit loans are denominated in rupees and take the form of a line of 
credit which can be drawn down by the recipient. See PET Film Final 
Determination Decision Memorandum, at section titled ``Benchmark for 
Loans and Discount Rates'' and also, Notice of Final Affirmative 
Countervailing Duty Determination: Certain Hot-Rolled Carbon Steel Flat 
Products from India, 66 FR 49635 (September 28, 2001) (Hot-Rolled Steel 
Final Determination) and accompanying Decision Memorandum (Hot-Rolled 
Steel Final Determination Decision Memorandum), at section titled 
``Benchmark for Loans and Discount Rates.'' In calculating the benefit 
for post-shipment export financing, where available, we used as the 
rupee-denominated, short-term benchmark the weighted-average rate for 
the company's ``inland'' or ``local'' bill discounting loans. The 
Department found, in the investigative segment of this proceeding that 
``inland'' or ``local'' bill discounting loans, like the post-shipment 
export financing loans, are rupee-denominated working capital loans 
used to finance receivables. See Notice of Preliminary Affirmative 
Countervailing Duty Determination and Alignment of Final Countervailing 
Determination with Final Antidumping Duty Determination: Polyethylene 
Terephthalate Film, Sheet, and Strip (PET Film) from India, 66 FR 
53389, 53390, (October 22, 2001) (PET Film Preliminary Determination) 
at section titled ``Benchmarks for Loans and Discount Rate,'' unchanged 
in PET Film Final Determination.
    Certain Polyplex pre-shipment loans are denominated in U.S. 
dollars. When loans are denominated in a foreign currency, our 
practice, in accordance with 19 CFR 351.505, is to use a foreign 
currency benchmark. See, e.g., Certain Pasta From Turkey: Final Results 
of Countervailing Duty Administrative Review, 66 FR 64398 (December 13, 
2001) and accompanying Issues and Decision Memorandum in the section 
entitled ``Benchmark Interest Rates for Short-term Loans.'' Polyplex 
reported that its working capital demand loans (WCDL) are its only 
short-term U.S. dollar-denominated loans. Thus, we used the interest 
rate on these loans as the benchmark for Polyplex's pre-shipment 
financing denominated in U.S. dollars. Polyplex reports that the WCDL 
are for financing both inventories and receivables and are provided as 
part of an overall package by the consortia of banks providing Polyplex 
with financing. The interest rates are a mark-up over London Interbank 
Offering Rates (LIBOR) and are fixed for the duration of the loan. 
These loans have a fixed repayment date.

Benchmarks for Long-Term Loans

    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, however, that Polyplex did not have rupee-denominated, long-term 
loans from commercial banks for all required years. Therefore, for 
those years for which we did not have company-specific information, we 
relied on a rupee-denominated, long-term benchmark interest rate from 
the immediately preceding year as directed by 19 CFR 
351.505(a)(2)(iii).

Basis for Reporting Consignment Sales

    Polyplex considered consigned merchandise that was consumed by U.S. 
customers during the POR, but shipped to the United States outside of 
the POR, to be reportable sales for purposes of calculating ad valorem 
subsidy rates. However, the Department has preliminarily required 
Polyplex to report its consignment sales on the same basis that it 
reported its non-consignment sales (date of shipment from Polyplex's 
factory) in order for the reported sales to correspond more closely to 
the basis on which CBP assesses countervailing duties.

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 merchandise destined for export. Companies 
may also establish pre-shipment credit lines upon which they may draw 
as needed. Limits on credit lines are established by commercial banks 
and are based on a company's creditworthiness and past export 
performance. Credit lines may be denominated either in Indian rupees or 
in a 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 at 
rates determined by the RBI.
    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 the 
lending bank. The credit covers the period from the date of shipment of 
the goods to the date of realization of the proceeds from the sale to 
the overseas customer. Under the Foreign Exchange Management Act of 
1999, exporters are required to realize proceeds from their export 
sales within 180 days after the date of shipment, which is monitored by 
the RBI. Post-shipment financing is, therefore, a working capital 
program used to finance export receivables. In general, post-shipment 
loans are granted for a period of no more than 180 days. If the loans 
are not repaid within the due date, the exporters lose the concessional 
interest rate on this financing.
    In the PET Film Final Determination, the Department determined that 
the pre- and post-shipment export financing programs conferred 
countervailable subsidies on the subject merchandise because (1) 
provision of the export financing constitutes a financial contribution 
pursuant to section 771(5)(D)(i) of the Act; (2) provision of the 
export financing conferred benefits on the respondents under section 
771(5)(E)(ii) of the Act because the interest rates under these 
programs were lower than commercially available

[[Page 18545]]

interest rates; and (3) these programs are contingent upon export 
performance, and therefore constitute countervailable export subsidies 
under section 771(5A)(B) of the Act. See PET Film Final Determination 
Decision Memorandum at section entitled ``Pre-shipment and Post-
shipment Export Financing.'' No new information or evidence of changed 
circumstances have been presented to warrant reconsideration of this 
finding. Therefore, for the purpose of these preliminary results, we 
continue to find this program countervailable.
    To calculate the benefit conferred by the pre-shipment and post-
shipment loans taken out by Polyplex, 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 constitutes the benefit. For 
pre-shipment loans, we divided the total benefit by Polyplex's total 
exports. For post-shipment loans, we divided the total benefit by 
Polyplex's exports of subject merchandise to the United States. On this 
basis, we preliminarily determine the net countervailable subsidy rate 
under the pre-shipment export financing program for Polyplex is 0.45 
percent ad valorem in 2001 and 0.67 percent ad valorem in 2002; the net 
subsidy rate under the post-shipment export financing program is 0.37 
percent ad valorem in 2001 and 0.05 percent ad valorem in 2002.

2. Duty Entitlement Passbook Scheme (DEPS)

    The DEPS enables exporting companies to earn import duty exemptions 
in the form of passbook credits, rather than cash. These DEPS passbook 
credits can be used for the future payment of import duties on any 
subsequent imports, regardless of whether they are consumed in the 
production of an exported product. DEPS credits are valid for twelve 
months and are transferable after the foreign exchange is realized from 
the export sales on which the DEPS credits are earned. All exporters 
are eligible to earn DEPS credits on a post-export basis, provided that 
the GOI has established a standard input-output norm (SION) for the 
exported product.
    In the PET Film Final Determination, the Department determined that 
DEPS conferred countervailable subsidies on the respondents because: 
(1) A financial contribution, as defined under section 771(5)(D)(ii) of 
the Act, is provided under the program, as the GOI provides the 
respondents with credits for the future payment of import duties; (2) 
the GOI does not have in place and does not apply a system that is 
reasonable and effective for the purposes intended under 19 CFR 
351.519(a)(4) and section 771(5)(E) of the Act, to confirm which 
inputs, and in what amounts, are consumed in the production of the 
exported products, and thus the entire amount of import duty exemption 
earned by the respondent constitutes a benefit; and (3) this program 
can only be used by exporters and, therefore, is specific under section 
771(5A)(B) of the Act. See PET Film Final Determination Decision 
Memorandum at section titled ``DEPS.'' No new information or evidence 
of changed circumstances have been presented in this review to warrant 
reconsideration of these findings. Therefore, we continue to find that 
the DEPS program is countervailable.
    Under 19 CFR 351.524(c), this program provides a recurring benefit. 
As the subsidies can be tied to a particular product (subject 
merchandise) in a particular market (the United States), we calculated 
the subsidy for each calendar year by dividing the total value of the 
DEPS licenses for subject merchandise sold in the United States, net of 
application fees paid, by the value of Polyplex's total exports of 
subject merchandise to the United States during the same year. 
Accordingly, we preliminarily determine that the net subsidy rates for 
Polyplex under the DEPS are 14.03 percent ad valorem for 2001 and 12.07 
percent ad valorem for 2002.

3. 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 attempting to earn convertible foreign currency equal to 
four to five times the value of the capital goods within a period of 
eight years. If the company fails to meet the export obligation, the 
company is subject to payment of all or part of the duty reduction, 
depending on the extent of the export shortfall, plus penalty interest.
    Polyplex reported that it imported machinery under the EPCGS in the 
years prior to and during the POR. For some of its imported machinery, 
Polyplex met its export requirements. As a result, the GOI completely 
waived import duties. However, Polyplex has not completed its export 
requirements for other imports of capital machinery. Therefore, 
although Polyplex received a reduction in import duties when the 
capital machinery was imported, the final waiver on the obligation to 
repay the duties has not yet been granted by the GOI.
    In the underlying investigation, we referenced and applied the 
determination reached in Hot-Rolled Steel Final Determination that the 
import duty reduction provided under the EPCGS is a countervailable 
export subsidy. See PET Film Preliminary Determination at section 
titled ``EPCGS'' (unchanged in the final determination). See also Hot-
Rolled Steel Final Determination Decision Memorandum at section titled 
``Analysis of Programs.'' No new information or evidence of changed 
circumstances has been provided in this review to warrant a 
reconsideration of this determination. Therefore, in accordance with 
section 771(5A)(B) of the Act, we continue to find that the receipt of 
benefits under this program is contingent upon export performance and 
therefore countervailable.
    In cases where the GOI has formally waived the unpaid duties on 
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. The criteria used by the Department in determining whether to 
allocate or expense the benefits from a countervailable subsidy program 
are described under 19 CFR 351.524. Specifically, recurring benefits 
are to be expensed in the year of receipt, while non-recurring benefits 
are to be allocated over time unless they amount to less than 0.5 
percent of the relevant sales.
    Normally, tax benefits are considered to be recurring benefits and 
are expensed in the year of receipt. Because 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, the 
Department's regulations recognize that, under certain circumstances, 
it may be more appropriate to allocate over time the benefits of a 
program normally considered a recurring subsidy, rather than to expense 
the benefits in the year of receipt. 19 CFR 351.524(c)(2) provides the 
criteria to apply to determine whether a benefit is recurring or non-
recurring. One of these criteria refers to ``whether the subsidy was 
provided for or tied to the capital structure or capital assets of the 
firm.'' We also stated in the preamble to our regulations (see 
Countervailing Duties; Final Rule, 63 FR 65348, 65393 (November 25, 
1998) (CVD Preamble)) that, if a government provides an import duty 
exemption tied to major capital

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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 illustrative list of recurring 
subsidies. See 19 CFR 351.524(c). Because the benefit received from the 
waiver of import duties under the EPCGS is tied to the capital assets 
of the respondent company, we determine that it is appropriate to treat 
the waiver of duties as a non-recurring benefit. We note that our 
approach on this issue is consistent with that taken in PET Film 
Preliminary Determination at section entitled ``EPCGS'' (unchanged in 
the final determination). See also Notice of Preliminary Affirmative 
Countervailing Duty Determination and Alignment of Final Countervailing 
Determination With Final Antidumping Duty Determinations: Certain Hot-
Rolled Carbon Steel Flat Products From India, 66 FR 20240, 20246, 20247 
(April 20, 2001) (Hot-Rolled Preliminary Determination) (unchanged in 
the final determination).
    In its questionnaire responses, Polyplex reported all of its 
imports of capital equipment made using EPCGS licenses and the 
application fees it paid to obtain its EPCGS licenses. We preliminarily 
determine that the application fees paid by the respondent qualifies as 
an ``* * * application fee, deposit, or similar payment paid in order 
to qualify for, or to receive, the benefit of the countervailable 
subsidy,'' which may be subtracted from the numerator when calculating 
the amount of the countervailable subsidy. See section 771(6)(A) of the 
Act.
    In order to calculate the benefit received from the waiver of 
Polyplex's import duties on their capital equipment imports, we 
determined the total amount of duties waived (net of application fees). 
Consistent with the approach followed in the investigative segment of 
this proceeding, we determine the year of receipt of the benefit to be 
the year in which the GOI formally waived the respondent company's 
outstanding import duties. See PET Film Preliminary Determination at 
section titled ``EPCGS'' (unchanged in final determination). See also 
Hot-rolled Preliminary Determination at section entitled ``EPCGS'' 
(unchanged in the final determination). 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 the respondent an import duty waiver. Those 
waivers with face values in excess of 0.5 percent of Polyplex's total 
export sales in the year in which the waivers were granted were 
allocated over 18 years, the company-specific AUL, using the 
Department's standard allocation methodology for non-recurring 
subsidies under 19 CFR 351.524(b).
    A second type of financial contribution and benefit conferred under 
this program involves the import duty reductions that Polyplex received 
on the imports of capital equipment for which it has not yet met its 
export requirements. For those capital equipment imports, Polyplex has 
unpaid duties that will become due to the GOI if the export 
requirements are not met. Therefore, we determine that Polyplex had 
outstanding contingent liabilities during the POR. 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 
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 the respondent applied but, as of the end of the 
POR, had not been finally waived by the GOI. Accordingly, we determine 
the benefit to be the interest that Polyplex would have paid during the 
POR had it borrowed the full amount of the duty reduction at the time 
of importation. We note that this methodology is consistent with our 
approach in the underlying investigation. See PET Film Preliminary 
Determination at section entitled ``EPCGS'' (unchanged in final 
determination). See also Hot-rolled Preliminary Determination at 
section entitled ``EPCGS'' (unchanged in the final determination). 
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 the respondent to fulfill its export commitments) 
occurs at a point in time more than one year after the date of 
importation of the capital goods.
    To calculate the benefit for this program, for each year we 
combined the total amount of benefits received on waived duties and the 
total amount of benefits conferred on Polyplex in the form of 
contingent liability loans. We then divided the total benefits under 
the program during 2001 and 2002 by the respective total export sales. 
We preliminarily determine the net countervailable subsidy to Polyplex 
from this program to be 5.37 percent ad valorem for 2001 and 5.93 
percent ad valorem for 2002.

4. Income Tax Exemption Scheme 80 HHC

    Under section 80HHC of the Income Tax Act, the GOI allows exporters 
to deduct from taxable income profits derived from export sales. In 
prior proceedings, the Department has found this program to be an 
export subsidy, and thus countervailable, because receipt of the 
benefit is contingent upon export performance. See Certain Iron-Metal 
Castings from India: Preliminary Results and Partial Rescission of 
Countervailing Duty Administrative Review, FR 61592 (November 12, 1999) 
(unchanged in the final results). See Certain Iron-Metal Castings from 
India: Final Results of Countervailing Duty Administrative Review, 65 
FR 31515 (May 18, 2000). As stated by the GOI in this proceeding, 
receipt of the 80HHC tax waiver remains contingent upon export 
performance. See October 23, 2003, GOI questionnaire response at 34, 
35. No new information or evidence of changed circumstances has been 
submitted in this proceeding to warrant reconsideration of this 
finding. See id at 34-39 and exhibit 11. Therefore, in accordance with 
sections 771(5)(D) and (E) of the Act, we continue to find this program 
countervailable because it provides a financial contribution by the 
government in the form of tax revenue not collected which also 
constitutes the benefit. Moreover, because the tax deduction is 
contingent upon export performance, we continue to find the program to 
be an export subsidy under section 771(5A)(B) of the Act and therefore 
countervailable.
    The benefits provided under this program are not tied to the 
production or sale of a particular product or products. It is the 
Department's long-standing practice to attribute a benefit from an 
export subsidy that is not tied to a particular product or market to 
all products exported by the company. See, e.g., Final Affirmative 
Countervailing Duty Determination: Certain Pasta from Turkey, 61 FR 
30366, 30370 (June 14, 1996). Therefore, to calculate the benefit that 
Polyplex received under section 80HHC for each year, we subtracted the 
total amount of income tax the company actually paid during the review 
period from the amount of income tax the company otherwise would have 
paid had it not claimed a deduction under section 80HHC. We then 
divided the difference by the fob value of the company's total exports. 
Thus, we preliminarily determine the net countervailable subsidy from 
this program to be 1.25 percent ad valorem for 2001 and 4.31 percent ad 
valorem for 2002.

[[Page 18547]]

5. Capital Subsidy

    Polyplex received a capital infusion of Rs. 2,500,000 in 1989. This 
subsidy was only discovered during verification of the underlying 
investigation. Based on the information obtained at verification, the 
Department determined that a financial contribution was provided by the 
GOI, pursuant to section 771(5)(D)(i) of the Act, and a benefit was 
received by Polyplex, under section 771(E) of the Act, in the amount of 
the capital subsidy. The Department found that there was insufficient 
time to determine whether this program is specific under section 
771(5A)(D) of the Act and stated its intention to reexamine this 
program in a future administrative review pursuant to 19 CFR 
351.311(c)(2). See PET Film Final Determination Decision Memorandum at 
14 and 15. See also October 9, 2003, questionnaire response at annex 5, 
containing Memorandum from Mark Manning to the File, Re: Verification 
Report for Polyplex Corporation Ltd. (February 11, 2002) at 2, 24 and 
25.
    In the instant review, the Department sent questionnaires to both 
the GOI and Polyplex and a further supplemental questionnaire to 
Polyplex, seeking information to determine whether this program is 
specific under section 771(5A) of the Act. However, due to the 
considerable time elapsed since the provision of the subsidy and also 
due to a fire at the former offices of Polyplex where numerous records 
of the company were destroyed, Polyplex stated that it was unable to 
provide any information regarding specificity. The GOI stated that 
neither it, nor the local government, had any details regarding the 
subsidy. See the GOI's October 23, 2003, questionnaire response and 
Polyplex's October 9, 2003, questionnaire response and Polyplex's 
November 18, 2003, supplemental questionnaire response.
    Section 776(a)(2) of the Act provides that if an interested party 
or any other person--(A) withholds information that has been requested 
by the administering authority, (B) fails to provide such information 
by the deadlines for the submission of the information or in the form 
and manner requested, subject to subsections (c)(1) and (e) of section 
782, the administering authority shall, subject to section 782(d), use 
the facts otherwise available in reaching the applicable determination 
under this title. Neither Polyplex nor the GOI have provided the 
information requested by the Department. However, in light of the 
circumstances described by the respondent, the Department finds no 
basis for determining that Polyplex has not cooperated to the best of 
its ability. Therefore, the Department, has preliminarily determined 
that the subsidy is specific under section 771(5A)(A) of the Act and, 
as neutral facts available determination, is allocating the amount over 
the firm's total sales.
    To calculate the subsidy rate for this program, we performed the 
``0.5 percent test,'' as prescribed under 19 CFR 351.524(b)(2). Because 
the grant exceeded 0.5 percent of Polyplex's total sales in 1989, the 
year in which the capital infusion was received, the benefits were 
allocated over 18 years, the company-specific AUL, using the 
Department's standard allocation methodology for non-recurring 
subsidies under section 19 CFR 351.524(b). We preliminarily determine 
the net countervailable subsidy from this program to be 0.02 percent ad 
valorem for 2001 and 0.02 percent ad valorem for 2002.

Program Preliminarily Determined Not to Confer a Benefit

6. Sales Tax Incentives

    The State of Maharashtra and the State of Uttaranchel grant a 
package scheme of incentives for privately-owned (i.e., not 100 percent 
owned by the GOI) manufacturers to invest in certain areas of their 
respective states. One of these incentives consists of either an 
exemption or deferral of state sales taxes. Through this incentive, 
companies are exempted from paying state sales taxes on purchases, and 
collecting sales taxes on sales; or, as an alternative, are allowed to 
defer submitting sales taxes collected on sales to the SOM for 10 to 12 
years. After the deferral period expires, the companies are required to 
submit the deferred sales taxes to the State of Maharashtra and the 
State of Uttaranchel in equal installments over five to six years. The 
total amount of the sales tax incentive either exempted or deferred is 
based on the size of the capital investment, and the area in which the 
capital is invested.
    In the underlying investigation we found that this program is 
specific within the meaning of sections 771(5A)(D)(i) and (iv) of the 
Act because the benefits of this program are limited to privately-owned 
(i.e., not 100 percent owned by the GOI) industries located within 
designated geographical regions within the SOM. We also found that the 
State of Maharashtra and the State of Uttaranchel provided a financial 
contribution under section 771(5)(D)(i) of the Act, and that the 
respondents may have benefitted under section 771(5)(E) of the Act 
through this program. For the sales tax exemption, we found that a 
benefit exists only to the extent that the taxes paid by the respondent 
as a result of this program are less than the taxes the respondent 
would have paid in the absence of the program. See 19 CFR 
351.510(a)(1).
    During the POR, Polyplex utilized only the feature of this program 
that exempts a company from the collection of the sales tax on its own 
sales. This exemption did not have the effect of Polyplex paying any 
less taxes from its own funds. Therefore, consistent with our 
determination in the investigation, we preliminarily determine that the 
there was no benefit to Polyplex from this program.

Programs Preliminarily Determined Not To Be Used

    1. The Sale and Use of Special Import Licenses (SILs) for Quality 
and SILs for Export Houses, Trading Houses, Star Trading Houses, or 
Superstar Trading Houses (GOI Program).
    2. Exemption of Export Credit from Interest Taxes.
    3. Loan Guarantees from the GOI.
    4. Benefits for Export Processing Zones /Export Oriented Units 
(EPZs/EOUs).
    5. Electricity Duty Exemption Scheme (SOM).
    6. Capital Incentive Schemes (SOM and SUP Program).
    7. Waiving of Interest on Loan by SICOM Limited (SOM Program).
    8. Infrastructure Assistance Schemes (State of Gujarat Program).

Preliminary Results of Administrative Review

    In accordance with 19 CFR 351.221(b)(4)(i), we calculated an 
individual subsidy rate for Polyplex for 2001 and 2002. We 
preliminarily determine the total net countervailable subsidy rate is 
21.49 percent ad valorem for 2001 and 23.05 percent ad valorem for 
2002.
    If the final results of this review remain the same as these 
preliminary results, the Department intends to instruct the CBP, within 
15 days of publication of the final results, to liquidate shipments 
from Polyplex of PET film from India entered, or withdrawn from 
warehouse, for consumption from October 22, 2001, through December 31, 
2001, at 21.49 percent ad valorem and from January 1, 2002, through 
February 19, 2002, as well as from June 27, 2002, through December 31, 
2002, at 23.05 percent ad valorem of the f.o.b. invoice price. Also, 
the rate of cash deposits of estimated countervailing duties will be 
set at 23.05 percent ad valorem for all shipments of

[[Page 18548]]

PET film made by Polyplex from India entered or withdrawn from 
warehouse, for consumption on or after the publication of the final 
results of this administrative review.
    Because the Uruguay Round Agreements Act (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. A requested review will normally cover only those companies 
specifically named. See 19 CFR 351.213(b). Pursuant to 19 CFR 
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 CFR 
353.22(e), the pre-URAA antidumping regulation on automatic assessment, 
which was identical to 19 CFR 355.22(g)). Therefore, the cash deposit 
rates for all companies except those covered by this review will be 
unchanged in the results of this review.
    We will instruct the CBP 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 are those established in the most recently completed 
administrative proceeding conducted under the URAA. See PET Film Order. 
These rates shall apply to all non-reviewed companies until a review of 
a company assigned these rates is requested.

Public Comment

    Pursuant to 19 CFR 351.224(b), the Department will disclose to 
parties to the proceeding any calculations performed in connection with 
these preliminary results within five days after the date of the public 
announcement of this notice. Pursuant to 19 CFR 351.309, interested 
parties may submit written comments in response to these preliminary 
results. Unless otherwise indicated by the Department, case briefs must 
be submitted within 30 days after the date of publication of this 
notice, and rebuttal briefs, limited to arguments raised in case 
briefs, must be submitted no later than five days after the time limit 
for filing case briefs, unless otherwise specified by the Department. 
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. Parties submitting case and/or rebuttal briefs 
are requested to provide the Department with copies of the public 
version of those comments on disk. Case and rebuttal briefs must be 
served on interested parties in accordance with 19 CFR 351.303(f). 
Also, pursuant to 19 CFR 351.310, within 30 days of the date of 
publication of this notice, interested parties may request a public 
hearing regarding arguments to be raised in the case and rebuttal 
briefs. Unless the Secretary specifies otherwise, the hearing, if 
requested, will be held two days after the date for submission of 
rebuttal briefs, that is, 37 days after the date of publication of 
these preliminary results.
    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 are due under 19 CFR 351.309(c)(ii). The Department 
will publish the final results of this administrative review, including 
the results of its analysis of arguments made in any case or rebuttal 
briefs.
    This administrative review is issued and published in accordance 
with sections 751(a)(1) and 777(i)(1) of the Act.

    Dated: April 1, 2004.
Jeffrey A. May,
Acting Assistant Secretary for Import Administration.
[FR Doc. 04-8016 Filed 4-7-04; 8:45 am]
BILLING CODE 3510-DS-P