India Takes up First Anti-Subsidy Case
Anti-Subsidy Investigation Initiated on Castings for Wind
Operated Electricity Generators from China on L&T Complaint
[Anti-dumping Initiation
Notification F. No.17/6/2013-DGAD dated 29th May 2014]
Subject: Initiation of
Countervailing Duty investigation concerning imports of Castings for Wind
Operated Electricity Generators, whether or not machined, in raw, finished or
sub-assembled form, or as a part of a subassembly, or as a part of an equipment/component
meant for wind-operated electricity generators, originating in or exported from
China PR.
M/s. Larsen & Toubro
Limited (hereinafter referred to as the applicant) filed an application before
the Designated Authority (hereinafter referred to as the Authority), on behalf
of the domestic industry, in accordance with the Customs Tariff Act 1975, as
amended from to time (hereinafter referred to as the Act) and Customs Tariff
(Identification, Assessment and Collection of Countervailing Duty on Subsidized
Articles and for Determination of Injury) Rules, 1995, as amended from to time,
(hereinafter referred to as the Rules), alleging subsidization of Castings for
Wind Operated Electricity Generators, whether or not machined, in raw, finished
or sub-assembled form, or as a part of a sub-assembly, or as a part of an
equipment/component meant for wind-operated electricity generators,
(hereinafter referred to as the subject goods), originating in or exported from
China PR (hereinafter referred to as the subject country) and requested for
initiation of anti-subsidy investigation for levy of countervailing duties on
the imports of the subject goods, originating in or exported from the subject
country.
2. And whereas, the Authority finds that sufficient prima facie evidence
of countervailable subsidies, in relation to imports
of the subject goods, originating in or exported from China PR, injury to the
domestic industry and causal link between the alleged subsidies and injury to
the domestic industry exist to justify initiation of a countervailing duty
investigation.
3. In view of the position, the Authority hereby initiates an
investigation into the alleged subsidisation and consequent injury to the
domestic industry in terms of the Rule 6 of the Rules, to determine the
existence, degree and effect of alleged subsidies and to recommend the amount
of countervailing duty, which, if levied, would be adequate to remove the
injury to the domestic industry.
Domestic Industry
4. The application has been filed by M/s Larsen & Toubro Limited
as domestic industry. As per the evidence available on record, production of
the applicant, being more than 50% of Indian production, accounts for a major
proportion of the total domestic production. The application thus satisfies the
requirements of Rule 2(b) and Rule 6(3) of the Rules. Thus, M/s. Larsen &
Toubro Limited is being treated as “domestic industry” within the meaning of
Rule 2(b) of Rules supra.
Product under consideration
5. The product under consideration in the present investigation is
“Castings for Wind Operated Electricity Generators, whether or not machined, in
raw, finished or sub-assembled form, or as a part of a sub-assembly, or as a
part of an equipment/component meant for wind-operated electricity generators”.
A Windmill requires a number of casting parts, including the Hub, Rotohub, Rotor Nabe, Main Frame,
Base Frame, Main Foundation, Nacelle, Nacelle Frame, Nacelle Foundation,
Bearing Housing, Bearing Support, Hollow Shaft, Main Axle, Rotor Shaft, Rotor
Coupling, Axle Pin, Main Shaft, Lateral Suspender, Pitch Stop, Stator,
Generator castings, Part of Generators, Rotor, Torque Arm support, etc. The
basic function of a casting is in a wind turbine, to be used in a wind mill
along with some other non-casting parts and components like blades, etc. which
leads to the generation of electricity.
6. The product under consideration is classified under Customs
sub-heading No. 8503 under the Customs Tariff Act, 1975. The product under
consideration does not have dedicated customs classification. The
classification is, however, indicative only and in no way binding on the scope
of the present investigation.
Like Articles
7. The applicant has claimed that the goods produced by the domestic
industry are like articles to the subject goods originating in or exported from
China PR. It has been stated that there is no significant difference in the
subject goods produced by the applicant and those exported from China PR. The
applicant claims that the two are technically and commercially substitutable.
For the purpose of present investigation, the subject goods produced by the
domestic industry are being treated as ‘like articles’ of the subject goods
imported from China PR.
Country involved
8. The country involved in the present investigation is People’s
Republic of China (also referred to as China PR).
Period of investigation
9. The Period of Investigation (POI), as proposed by the applicant,
was from 1st October 2012 to 30th September 2013 (12 months). However, to make
required analysis on the basis of more updated data, the Authority has
determined the POI as 1st October 2012 to 31st December 2013 (15 months). For
the purpose of analyzing injury, the data of previous
three years, i.e. April 2010 – March, 2011, April 2011 – March 2012, April 2012
- March 2013 and the POI.
Allegation of subsidisation
10. The applicant has alleged that the producers/exporters of the
subject goods have benefited from the actionable subsidies provided by various
levels in the Government of China, including the governments of the different
provinces and municipalities in which the producers/exporters are located. The
applicant has relied upon documents such as the Canadian Investigation
Authority’s Statements of Reasons for various investigations, a US countervailing
duty investigation finding, European Union finding, Australian reports,
relevant Chinese laws and regulations, media sources, government reports and
independent reports, analysis and studies. The evidence provided by the
applicant prima facie shows that the producers/exporters of the subject
goods in the subject country have benefited from a number of subsidies granted
by the Government of the People’s Republic of China.
11. The claim of actionable subsidies consist,
inter alia, of the following programmes:
I. Special Economic Zone (SEZ) Incentives and other Designated Areas
Program 1: Preferential Tax Policies
for Enterprises with Foreign Investment (FIEs) Established in Special Economic
Zones (excluding Shanghai Pudong Area).
Program 2: Preferential Tax Policies
for FIEs Established in the Coastal Economic Open Areas and in the Economic and
Technological Development Zones
Program 3: Preferential Tax Policies for
FIEs Established in the Pudong Area of Shanghai
Program 4: Corporate Income Tax Exemption
and/or Reduction in SEZs and Other Designated Areas
Program 5: Local Income Tax Exemption
and/or Reduction in SEZs and Other Designated Areas
Program 6: Tariff and Value-added Tax
(VAT) Exemptions on Imported Materials and Equipment in SEZs and Other Designated
Areas
Program 7: Preferential Tax for Casing
and Forging Systems
II. Grants
Program 8: The State Key Technology
Renovation Projects Fund
Program 9: Reimbursement of Anti-dumping
and/or Countervailing Legal Expenses by the Local Governments
Program 10: Research & Development
(R&D) Assistance Grant
Program 11: Innovative Experimental
Enterprise Grant
Program 12: Superstar Enterprise Grant
Program 13: Awards to enterprises whose
products qualify for "Well- Known Trademarks of China” or "Famous
Brands of China"
Program 14: Awards to Enterprises Whose Products Qualify for "Well- Known Trademarks of
China" or "Famous Brands of China"
Program 15:Venture Investment Fund of Hi-Tech
Industry
Program 16: Grants for Encouraging the
Establishment of Headquarters and Regional Headquarters with Foreign Investment
Program 17: Innovative Small and Medium
Enterprise Grants
Program 18: Grants to Privately-Owned
Export Enterprises
III. Equity Program
Program 19: Equity infusions
Program 20: Unpaid dividends
Program 21: Preferential loans and
interest rates to the casting industry
Program 22: Reduced Tax Rate for
Productive FIEs Scheduled to Operate for a Period not Less Than 10 Years
Program 23: Preferential Tax Policies for
Foreign Invested Export Enterprises
Program 24: Preferential Tax Policies for
FIEs which are Technology Intensive and Knowledge Intensive
Program 25: Preferential Tax Policies for
the Research and Development of FIEs
Program 26: Preferential Tax Policies for
FIEs and Foreign Enterprises Which Have Establishments or Places in China and
are Engaged in Production or Business Operations Purchasing Domestically
Produced Equipments
Program 27: Preferential Tax Policies for
Domestic Enterprises Purchasing Domestically Produced Equipments
for Technology Upgrading Purpose
Program 28: Income Tax Refund for
Re-investment of FIE Profits by Foreign Investors
IV. Relief from Duties and Taxes on Materials and Machinery
Program 29: Exemption of Tariff and
Import VAT for Imported Technologies and Equipment
Program 30: Reduction in Land Use Fees
Program 31: Input Materials Hot Rolled
Steel Provided by Government at Less than Fair Market Value
Program 32: Hot rolled Steel Provided by
Government at Less than Fair Market Value
Program33: Electricity provided by Government
at less than Fair Market Value:
Program 33: Land for Less Than Adequate
Remuneration to Companies Located in Industrial or Other Special Economic Zones
Program 34: Programme consisting of
provision of water for less than adequate remuneration
Program 35: Provision of various goods
for less than adequate remuneration
Program 36: Tax Policies for the
deduction of research and development (R&D) expenses
Program 37: Tax concessions for Central
and Western Regions
Program 38: Income tax credit for the
purchase of domestically manufactured production equipment
Program 39: Preferential tax policies
for companies that are recognised as high and new technology companies
Program 40: Income tax concessions for
the enterprises engaged in comprehensive resource utilisation (special raw
materials')
Program 41: Tax credit concerning the
purchase of special equipment
Program 42: Preferential income tax
policy for the enterprises in the Northeast region
Program 43: Dividend exemption between
qualified resident enterprises
Program 44: Purchase of Goods by the
Government for higher than adequate Remuneration
12. The evidence provided by the applicant prima facie shows that the
above programmes constitute countervailable subsidies
since they involve a financial contribution or income or price support from the
Government of the People's Republic of China or other regional governments
(including public bodies) and confer a benefit to the recipients. They are
alleged to be contingent upon export performance and/or the use of domestic
over imported goods and/or are limited to certain sectors and/or types of
enterprises and/or locations, and are therefore specific and countervailable.
13. Apart from the above stated programmes of Government of China PR,
alleged to be actionable subsidies, the Designated Authority may investigate in
to any other program of Government of China PR which may be revealed during the
course of the investigation as actionable subsidies.
Consultation
14. The pre-initiation consultations were held with the representatives
of the Government of China PR on 5th May 2014 in New Delhi. During the
consultations, the Government of China has claimed that some of the alleged
subsidy schemes/programmes have already been rescinded. However, the Government
of China PR has not provided any evidence in support of their aforesaid claim.
Further, the Government of China PR has not disputed the existence of other
alleged subsidies/programmes. In view of the above position, the Authority
holds that there is sufficient prima facie evidence with regard to existence of
countervailable subsidies to justify initiation of
countervailing duty investigation against China PR in terms of the Rules.
Injury and Causal Link
15. The applicant has furnished information on various parameters
relating to ‘injury’ to the domestic industry as prescribed under Rules.The evidence provided by the applicant prima facie
shows that the imports from subject country have increased not only in
absolute terms but also in relation to production and consumption in India.
Performance of the domestic industry has deteriorated in terms of production,
capacity utilization, sales values & volume, profits, return on
investments, cash flow and market share. Imports are significantly undercutting
the prices of domestic industry and the effect of the imports is to depress
prices to a significant degree. The Authority notes that there is sufficient
prima facie evidence that the ‘injury’ to the domestic industry has been caused
by subsidized imports from China PR to justify initiation of a countervailing
duty investigation in terms of the Rules.
Procedure & Submission of
information
16. During the course of the investigation, the Authority will
determine whether the product concerned originating in the subject country is
being subsidised and countervailable and whether this
subsidization has caused injury to the Indian domestic industry.
17. The exporters in China PR, Government of China PR, importers and
users in India known to be concerned and the domestic industry are being
informed separately to enable them to file all information relevant in the form
and manner prescribed. Any other party interested to participate in the present
investigation may write to:
The Designated Authority
Directorate General of Anti-Dumping & Allied
Duties
Department of Commerce
Ministry of Commerce & Industry
Room No.240, Udyog Bhawan
New Delhi-110107
18. As per Rule 7(5) of the Rules supra, the Designated Authority is
also providing opportunity to the industrial users of the product under investigation,
and to representative consumer organizations who can furnish information which
is relevant to the investigation regarding subsidy, injury and causal link. Any
other interested party may also make its submissions relevant to the
investigation within the time limit set out below.
Time limit
19. Any information relating to the present investigation should be
sent in writing so as to reach the Authority at the address mentioned above not
later than 40 (forty) days from the date of publication of this notification.
The Government of China, known exporters and importers, who are being addressed
separately, are however required to submit the information within 40 (forty)
days from the date of the letter addressed to them separately. If no information
is received within the prescribed time limit or the submitted information is
incomplete, the Authority may record its findings on the basis of the facts
available on record in accordance with the Rules. It may be noted that no
request, whatsoever, shall be entertained for extension in the prescribed time
limit.
20. Any information relating to this investigation should be sent in
writing so as to reach the Authority at the above address not later than 40
days from the date of publication of this notification. If no information is
received within the prescribed time limit or the information received is
incomplete, the Authority may record their findings on the basis of the facts
available on record in accordance with the Rules supra.
Submission of Information on
Non-Confidential basis
21. In terms of Rule 8 of the Rules, the interested parties are
required to submit non-confidential version of any confidential information
provided to the Authority. In case confidentiality is claimed on any part of
the questionnaire’s response/submissions, the same must be submitted in two
separate sets (a) marked as Confidential (with title, index, number of pages,
etc.) and (b) other set marked as Non-Confidential (with title, index, number
of pages, etc.). All the information supplied must be clearly marked as either
“confidential” or “nonconfidential” at the top of
each page.
22. Information supplied without any mark as “Confidential” shall be
treated as non-confidential and the Authority shall be at liberty to allow the
other interested parties to inspect any such non-confidential information. Two
(2) copies each of the confidential version and the non-confidential version
must be submitted.
23. For information claimed as confidential; the supplier of the
information is required to provide a good cause statement along with the
supplied information as to why such information cannot be disclosed and/or why
summarization of such information is not possible.
24. The non-confidential version is required to be a replica of the
confidential version with the confidential information preferably indexed or
blanked out / summarized depending upon the information on which
confidentiality is claimed. The non-confidential summary must be in sufficient
detail to permit a reasonable understanding of the substance of the information
furnished on confidential basis. However, in exceptional circumstances, party
submitting the confidential information may indicate that such information is
not susceptible of summary; a statement of reasons why summarization is not
possible, must be provided to the satisfaction of the Authority.
25. The Authority may accept or reject the request for confidentiality
on examination of the nature of the information submitted. If the Authority is
satisfied that the request for confidentiality is not warranted or the supplier
of the information is either unwilling to make the information public or to
authorize its disclosure in generalized or summary form, it may disregard such
information.
26. Any submission made without a meaningful non-confidential version
thereof or without a good cause statement on the confidentiality claim may not
be taken on record by the Authority. The Authority on being satisfied and
accepting the need for confidentiality of the information provided; shall not
disclose it to any party without specific authorization of the party providing
such confidential information.
Non cooperation
27. In terms of Rule 7(8), in case where an interested party refuses
access to or does not provide necessary information within a reasonable period,
or significantly impedes the investigation, the Authority may record its
findings on the basis of the facts available to it and make such
recommendations to the Central Government as deemed fit.
Inspection of Public File
28. In terms of Rule 7(7), any interested party may inspect the public
file containing non-confidential version of the evidence submitted by other
interested parties.