Polyethylene Terephthalate Film, Sheet, and Strip From India: Preliminary Results of Countervailing Duty Administrative Review, 47558-47563 [2011-19949]

Agencies

• DEPARTMENT OF COMMERCE
• International Trade Administration

[Federal Register Volume 76, Number 151 (Friday, August 5, 2011)]
[Notices]
[Pages 47558-47563]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2011-19949]


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DEPARTMENT OF COMMERCE

International Trade Administration

[C-533-825]


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

AGENCY: Import Administration, International Trade Administration, 
Department of Commerce.
SUMMARY: The Department of Commerce (the Department) is conducting an 
administrative review under the countervailing duty (CVD) order on 
polyethylene terephthalate film, sheet and strip (PET Film) from India. 
This review covers one respondent, Ester Industries Ltd. (Ester), a 
producer and exporter of PET Film from India.
    We preliminarily determine that Ester has benefitted from 
countervailable subsidies provided on the production and export of PET 
Film from India. See the ``Preliminary Results of Administrative 
Review'' section, below. If the final results remain the same as the 
preliminary results of this review, we intend to instruct U.S. Customs 
and Border Protection (CBP) to assess countervailing duties. Interested 
parties are invited to comment on the preliminary results of this 
administrative review. See the ``Disclosure and Public Hearing'' 
section of this notice, below.

DATES: Effective Date: August 5, 2011.

FOR FURTHER INFORMATION CONTACT: Toni Page or Elfi Blum, AD/CVD 
Operations, Office 6, Import Administration, International Trade 
Administration, U.S. Department of Commerce, 14th Street and 
Constitution Avenue, NW., Washington, DC 20230; telephone: (202) 482-
1398 or (202) 482-0197, respectively.

SUPPLEMENTARY INFORMATION:

Background

    On July 1, 2002, the Department published in the Federal Register 
the 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). On July 1, 2010, the Department 
published a notice of opportunity to request an administrative review 
of the countervailing duty order on PET Film from India covering the 
period January 1, 2009, through December 31, 2009 (POR). See 
Antidumping or Countervailing Duty Order, Finding, or Suspended 
Investigation; Opportunity To Request Administrative Review, 75 FR 
38074 (July 1, 2010). The Department received a request for review from 
the petitioners (Dupont Teijin Films, Mitsubishi Polyester Film, Inc., 
SKC, Inc., and Toray Plastics (America), Inc.) and two companies, Ester 
and SRF Limited. On August 31, 2010, the Department published a notice 
of initiation of administrative review with respect to Ester and SRF 
Limited. See Initiation of Antidumping and Countervailing Duty 
Administrative Reviews and Deferral of Initiation of Administrative 
Review, 75 FR 53274 (August 31, 2010). On October 1, 2010, SRF Limited 
withdrew its request for an administrative review. On July 7, 2011, the 
Department published a rescission, in part, with respect to SRF 
Limited. See Polyethylene Terephthalate Film, Sheet and Strip From 
India: Rescission, in Part, of Countervailing Duty Administrative 
Review, 76 FR 39855 (July 7, 2011).
    The Department issued the initial questionnaires to the Government 
of India (GOI), Ester, and SRF Limited on September 15, 2010. Ester 
submitted its questionnaire response on October 20, 2010, while the GOI 
submitted its questionnaire response on October 21, 2010. The 
Department issued its first supplemental questionnaires to the GOI and 
Ester on February 16, 2011. On March 11, 2011, Ester submitted its 
first supplemental questionnaire response. The GOI filed its first 
supplemental questionnaire response after the deadline established by 
the Department. Because the GOI missed the filing deadline and did not 
request a timely extension of the filing deadline, the Department 
rejected the GOI's late filing and no further supplemental 
questionnaires have been sent to the GOI. The Department issued a 
second supplemental questionnaire to Ester on June 16, 2011 and 
received the company's second supplemental questionnaire response on 
July 5, 2011.
    On March 28, 2011, the Department extended the deadline for the 
preliminary results of the countervailing duty administrative review 
from April 2, 2011 to August 1, 2011. See Polyethylene Terephthalate 
Film, Sheet, and Strip From India: Extension of Time Limit for 
Preliminary Results of Countervailing Duty Administrative Review, 76 FR 
18156 (April 1, 2011).
    On July 20, 2011, petitioners filed pre-preliminary comments 
regarding Ester's data.

Scope of the Order

    The products covered by the countervailing duty order are all 
gauges of raw, pretreated, or primed Polyethylene Terephthalate Film, 
Sheet and Strip, 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 currently classifiable in the Harmonized Tariff 
Schedule of the United States (HTSUS) under item number 3920.62.00.90. 
HTSUS subheadings are provided for convenience and customs purposes. 
The written description of the scope of the countervailing duty order 
is dispositive.

Period of Review

    This countervailing duty administrative review covers the period

[[Page 47559]]

January 1, 2009, through December 31, 2009.

Subsidies Valuation Information

Allocation Period

    Under 19 CFR 351.524(d)(2)(i), we will presume the allocation 
period for non-recurring subsidies to be the average useful life (AUL) 
prescribed by the Internal Revenue Service (IRS) for renewable physical 
assets of the industry under consideration (as listed in the IRS's 2006 
Class Life Asset Depreciation Range System, as updated by the 
Department of the Treasury). This presumption will apply unless a party 
claims and establishes that these tables do not reasonably reflect the 
AUL of the renewable physical assets of the company or industry under 
investigation. Specifically, the party must establish that the 
difference between the AUL from the tables and the company-specific AUL 
or country-wide AUL for the industry under investigation is 
significant, pursuant to 19 CFR 351.524(d)(2)(i) and (ii). In the IRS 
Tables, PET Film falls under the category ``Manufactured Chemicals and 
Allied Products.'' For that category, the IRS tables specify a class 
life of 9.5 years, which is rounded to establish an AUL of 10 years.
    In the investigation period of this case, Ester rebutted the 
presumption and the Department determined to apply a company-specific 
AUL of 18 years. See Notice of Final Affirmative Countervailing Duty 
Determination: Polyethylene Terephthalate Film, Sheet, and Strip (PET 
Film) From India, 67 FR 34905 (May 16, 2002) (PET Film Final 
Determination), and accompanying Issues and Decision Memorandum, at 
``Allocation Period.'' In the instant administrative review, Ester 
argues that the Department should adjust its 18 year company-specific 
AUL to 20 years for any non-recurring subsidies received after the 
period of investigation (POI). For the preliminary results of this 
countervailing duty administrative review, the Department determines 
that Ester has not provided the type of information required to 
establish that its AUL should be changed in accordance with the 
Department's regulations as set forth in 19 CFR 351.524(d)(2)(i) and 
(iii) and that its proposed AUL should not be used to determine the 
allocation period for non-recurring subsidies received after the POI . 
Therefore, the Department will continue to use the original company-
specific AUL of 18 years that Ester demonstrated in the investigation 
to allocate all non-recurring subsidies.

Benchmark Interest Rates and Discount Rates

    For programs requiring the application of a benchmark interest rate 
or discount rate, 19 CFR 351.505(a)(1) states a preference for using an 
interest rate that the company would pay on a comparable commercial 
loan that the company could obtain on the market. Also, 19 CFR 
351.505(a)(3)(i) states that when selecting a comparable commercial 
loan that the recipient ``could actually obtain on the market'' the 
Department will normally rely on actual short-term and long-term loans 
obtained by the firm. However, when there are no comparable commercial 
loans, the Department may use a national average interest rate, 
pursuant to 19 CFR 351.505(a)(3)(ii).
    Pursuant to 19 CFR 351.505(a)(2)(iv), if a program under review is 
a government provided, short-term loan program, the preference would be 
to use a company-specific annual average of the interest rates on 
comparable commercial loans during the year in which the government-
provided loan was taken out, weighted by the principal amount of each 
loan. For this review, the Department required a rupee-denominated 
short-term loan benchmark rate to determine benefits received under the 
Pre-Shipment and Post-Shipment Export Financing program. For further 
information regarding this program, see the ``Pre-Shipment and Post-
Shipment Export Financing'' section below.
    In prior reviews of this case, the Department determined that 
Inland Bill Discounting (IBD) loans are more comparable to pre- and 
post-shipment export financing loans than other types of rupee-
denominated short-term loans. See, e.g., Notice of Preliminary Results 
and Rescission in Part of Countervailing Duty Administrative Review: 
Polyethylene Terephthalate Film, Sheet, and Strip from India, 70 FR 
46483, 46485 (August 10, 2005) (PET Film Preliminary Results of 2003 
Review) unchanged in Final Results of Countervailing Duty 
Administrative Review: Polyethylene Terephthalate Film, Sheet, and 
Strip from India, 71 FR 7534 (February 13, 2006), and accompanying 
Issues and Decision Memorandum at ``Benchmarks for Loans and Discount 
Rate'' (PET Film Final Results of 2003 Review).
    In the 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, 53390-91 (October 
22, 2001), at ``Benchmarks for Loans and Discount Rate,'' unchanged in 
PET Film Final Determination, the Department determined that, in the 
absence of IBD loans, cash credit (CC) loans are the next most 
comparable type of short-term loans to pre-shipment and post-shipment 
export financing. Like pre-shipment export financing, CC loans are 
denominated in rupees and take the form of a line of credit which can 
be drawn down by the recipient. There is no new information or evidence 
of changed circumstances which would warrant reconsidering this 
finding. Ester did not obtain IBD loans during the POR; however, it did 
take out CC short-term loans during the POR. Therefore, for these 
preliminary results, we used the weighted average interest rate 
(derived from the amount of interest paid by Ester on its rupee-
denominated short-term CC loans) as the benchmark for Ester's pre- and 
post-shipment export financing.
    Pursuant to 19 CFR 351.505(a)(2)(iii), in selecting a comparable 
loan if a program under review is a government provided, long-term loan 
program, the preference would be to use a loan the terms of which were 
established during, or immediately before, the year in which the terms 
of the government-provided loan were established. Pursuant to 19 CFR 
351.505(a)(2)(ii) the Department will not consider a loan provided by a 
government-owned special purpose bank to be a commercial loan for 
purposes of selecting a loan to compare with a government-provided 
loan. The Department has previously determined that the Industrial 
Development Bank of India (IDBI) is a government-owned special purpose 
bank. See PET Film Final Results of 2003 Review, and accompanying 
Issues and Decision Memorandum, at Comment 3. Further, the Department 
previously has determined that the Industrial Finance Corporation of 
India (IFCI) and the Export-Import Bank of India (EXIM) are government-
owned special purpose banks. See Polyethylene Terephthalate Film, 
Sheet, and Strip from India: Final Results of Countervailing Duty 
Administrative Review, 73 FR 7708 (February 11, 2008), and accompanying 
Issues and Decision Memorandum at ``Benchmark Interest Rates and 
Discount Rates.'' As such, the Department does not use loans from the 
IDBI, IFCI, or EXIM, if reported by the respondents, as a basis for a 
commercial loan benchmark.
    In this review, Ester had comparable commercial long-term rupee-
denominated loans for some of the required years which the Department

[[Page 47560]]

was able to use for long-term benchmarks. However, for the years which 
we did not have company-specific loan information, and where the 
relevant information was on the record, we relied on comparable long-
term rupee-denominated benchmark interest rates from the immediately 
preceding year as directed by 19 CFR 351.505(a)(2)(iii). When there 
were no comparable long-term rupee-denominated loans from commercial 
banks during either the year under consideration or the preceding year, 
we used national average long-term interest rates, pursuant to 19 CFR 
351.505(a)(3)(ii), from the International Monetary Fund's publication 
International Financial Statistics (IMF Statistics).
    Ester received exemptions from import duties on the importation of 
capital equipment under the Export Promotion Capital Goods Scheme 
(EPCGS) program. As discussed in more detail below, Ester had not 
fulfilled its export obligation for certain EPCGS licenses. We treat 
EPCGS licenses with unfulfilled export obligations as interest-free 
contingent liability loans See, e.g., PET Film Preliminary Results of 
2003 Review, 70 FR at 46488, unchanged in PET Film Final Results of 
2003 Review. For the EPCGS licenses with unfulfilled export 
obligations, the Department used as long-term benchmarks, Ester's long-
term loans from the required year or the preceding year as well as 
interest rates from IMF Statistics, as described above.
    Finally, we determine grants to be non-recurring benefits in 
accordance with 19 CFR 351.524; thus, the Department must identify an 
appropriate discount rate for purposes of allocating these non-
recurring benefits over time in accordance with 19 CFR 351.524(d)(3). 
The regulations provide several options in order of preference. The 
first among these is the cost of long-term fixed-rate loans of the firm 
in question for each year in which the government agreed to provide the 
non-recurring subsidies excluding any loans which have been determined 
to be countervailable and excluding loans from government banks. As the 
second option, the regulations direct us to use the average annual cost 
of long-term, fixed-rate loans in the country in question. Thus, for 
those years for which Ester did not report any long-term fixed-rate 
commercial loans, we used the yearly average long-term lending rate in 
India from the IMF Statistics as the discount rate.

Denominator

    When selecting an appropriate denominator for use in calculating 
the ad valorem subsidy rate, the Department considers the basis for the 
respondent's receipt of benefits under each program at issue. As 
discussed in further detail below, we preliminarily determine that the 
benefits received by Ester under all of the programs found 
countervailable were contingent upon export performance. Therefore, for 
our calculations for EPCGS benefits, we will use total export sales 
inclusive of deemed exports as the denominator. Because DEPS and Pre-
Shipment and Post-Shipment Export Financing require that the recipient 
demonstrate physical exports, we used total export sales net of deemed 
exports. See 19 CFR 351.525(b)(2); see also Polyethylene Terephthalate 
Film, Sheet, and Strip From India: Final Results of Countervailing Duty 
New Shipper Review, 76 FR 30910 (May 27, 2011), and accompanying Issues 
and Decision Memorandum at the ``Denominator'' section. In addition, 
the Department has previously found that exporters qualify for Post-
Shipment Export Financing by presenting their export documents to the 
lending bank. See Polyethylene Terephthalate Film, Sheet, and Strip 
from India: Final Results of Countervailing Duty Administrative Review, 
72 FR 6530 (Februrary 12, 2007) and accompanying Issues and Decision 
Memorandum at ``Pre-Shipment and Post-Shipment Export Financing.'' 
Therefore, we used Ester's total export sales of subject merchandise to 
the United States as the denominator for Post-Shipment Export 
Financing.

A. Programs Preliminarily Determined To Be Countervailable

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., purchasing raw materials, warehousing, packing, 
transportation, etc.) for merchandise destined for exportation. 
Companies may also establish pre-shipment credit lines upon which they 
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. 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 of shipment. 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 not more than 180 days, and may be obtained in Indian rupees and in 
foreign currencies. In the original investigation, the Department 
determined that the pre-shipment and post-shipment export financing 
programs conferred countervailable subsidies on the subject merchandise 
because: (1) The provision of the export financing constitutes a 
financial contribution pursuant to section 771(5)(D)(i) of the Tariff 
Act of 1930, as amended (the Act) as a direct transfer of funds in the 
form of loans; 2) the provision of the export financing confers 
benefits on the respondents under section 771(5)(E)(ii) of the Act to 
the extent that the interest rates provided under these programs are 
lower than comparable commercial loan interest rates; and (3) these 
programs are specific under section 771(5A)(B) of the Act because they 
are contingent upon export performance. See PET Film Final 
Determination at ``Pre-Shipment and Post-Shipment Export Financing.'' 
There is no new information or evidence of changed circumstances that 
would warrant reconsidering this finding. Therefore, for these 
preliminary results, we continue to find this program countervailable.
    Ester reported receiving both pre- and post-shipment export 
financing during the POR. The benefit conferred by the pre-shipment and 
post-shipment loans is the difference between the amount of interest 
the company paid on the government loan and the amount of interest it 
would have paid on a comparable commercial loan (i.e., the short-term 
benchmark). Because pre-shipment loans are tied to a company's total 
physical exports rather than physical exports of subject merchandise, 
we calculated the subsidy rate for these loans by dividing the total 
benefit by the value of Ester's total exports, net of deemed exports, 
during the POR. See 19

[[Page 47561]]

CFR 351.525(b)(2). Because post-shipment loans are tied to specific 
shipments of a particular product to a particular country, we divided 
the total benefit from post-shipment loans tied to exports of subject 
merchandise to the United States by the value of total exports of 
subject merchandise to the United States during the POR pursuant to 19 
CFR 351.525(b)(4). On this basis, we preliminarily determine the 
countervailable subsidy from pre- and post-shipment export financing 
for Ester to be 7.72 percent ad valorem.
2. Export Promotion Capital Goods Scheme (EPCGS)
    The EPCGS provides for a reduction or exemption of customs duties 
and excise taxes on imports of capital goods used in the production of 
exported products. Under this program, producers pay reduced duty rates 
on imported capital equipment by committing to earn convertible foreign 
currency equal to four to five times the value of the capital goods 
within a period of eight years. Once a company has met its export 
obligation, the GOI will formally waive the duties on the imported 
goods. If a 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 shortfall in foreign currency earnings, plus an 
interest penalty.
    In the investigation, the Department determined that import duty 
reductions or exemptions provided under the EPCGS are countervailable 
export subsidies because the scheme: (1) Provides a financial 
contribution pursuant to section 771(5)(D) of the Act; (2) provides two 
different benefits under section 771(5)(E) of the Act; and (3) is 
specific pursuant to section 771(5A) (B) of the Act because the program 
is contingent upon export performance. See, e.g., PET Film Final 
Determination and accompanying Issues and Decision Memorandum at 
``EPCGS.'' Because there is no new information or evidence of changed 
circumstances that would warrant reconsidering our determination that 
this program is countervailable, we continue to find that this program 
is countervailable for these preliminary results.
    Since the unpaid duties are a liability contingent on subsequent 
events, under the EPCGS, the exempted import duties would have to be 
paid to the GOI if the accompanying export obligations are not met. It 
is the Department's practice to treat any balance on an unpaid 
liability that may be waived in the future, as a contingent-liability 
interest-free loan pursuant to 19 CFR 351.505(d)(1). See PET Film Final 
Determination, and accompanying Issues and Decision Memorandum, at 
``EPCGS.'' These contingent-liability loans constitute the first 
benefit under the EPCGS. The second benefit arises when the GOI waives 
the duty on imports of capital equipment covered by those EPCGS 
licenses for which the export requirement has already been met. For 
those licenses, for which companies demonstrate that they have 
completed their export obligation, we treat the import duty savings as 
grants received in the year in which the GOI waived the contingent 
liability on the import duty exemption pursuant to 19 CFR 
351.505(d)(2).
    Import duty exemptions under this program are approved for the 
purchase of capital equipment. The preamble to our regulations states 
that, if a government provides an import duty exemption tied to major 
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 * * *'' See 
Countervailing Duties; Final Rule, 63 FR 65348, 65393 (November 25, 
1998). In accordance with 19 CFR 351.524(c)(2)(iii) and past practice, 
we are treating these import duty exemptions on capital equipment as 
non-recurring benefits. See, e.g., Polyethylene Terephthalate Film, 
Sheet, and Strip from India: Final Results of Countervailing Duty 
Administrative Review, 75 FR 6634 (February 10, 2010) and accompanying 
Issues and Decision Memorandum at Comment 9.
    Ester imported capital goods at reduced import duty rates under the 
EPCGS in the years prior to the POR. Information provided by Ester 
indicates that certain licenses were issued for the purchase of capital 
goods involved in the production of both subject and non-subject 
merchandise. See Ester's July 5, 2011 Second Supplemental Questionnaire 
Response at Exhibit 10. Based on the information and documentation 
submitted by Ester, we cannot determine which EPCGS licenses are tied 
to the production of a particular product within the meaning of 19 CFR 
351.525(b)(5). As such, we find that all of Ester's EPCGS licenses 
benefit all of the company's exports.
    Ester met the export requirements for certain EPCGS licenses prior 
to December 31, 2009, and the GOI has formally waived the relevant 
import duties. For most of its licenses, however, Ester has not yet met 
its export obligation as required under the program. Therefore, 
although Ester has received a deferral from paying import duties when 
the capital goods were imported, the final waiver on the obligation to 
pay the duties has not yet been granted for many of these imports.
    To calculate the benefit received from the GOI's formal waiver of 
import duties on Ester's capital equipment imports where its export 
obligation was met prior to December 31, 2009, we considered the total 
amount of duties waived, i.e., the calculated duties payable less the 
duties actually paid in the year, net of required application fees, in 
accordance with section 771(6) of the Act, to be the benefit and 
treated these amounts as grants pursuant to 19 CFR 351.504. Further, 
consistent with the approach followed in the investigation, we 
determine the year of receipt of the benefit to be the year in which 
the GOI formally waived Ester's outstanding import duties. See PET Film 
Final Determination, and accompanying Issues and Decision Memorandum, 
at Comment 5. Next, we performed the ``0.5 percent test,'' as 
prescribed under 19 CFR 351.524(b)(2), for the total value of duties 
waived, for each year in which the GOI granted Ester an import duty 
waiver. For any years in which the value of the waived import duties 
was less than 0.5 percent of Ester's total export sales, we expensed 
the value of the duty waived to the year of receipt. For years in which 
the value of the waivers exceeded 0.5 percent of Ester's total export 
sales in that year, we allocated the value of the waivers using Ester's 
company-specific allocation period of 18 years for non-recurring 
subsidies, in accordance with 19 CFR 351.524(d)(2). See ``Allocation 
Period'' section, above. For purposes of allocating the value of the 
waivers over time, we used the appropriate discount rate for the year 
in which the GOI officially waived the import duties. See ``Benchmark 
Interest Rates and Discount Rates'' section, above.
    As noted above, import duty reductions or exemptions that Ester 
received on the imports of capital equipment for which it has not yet 
met export obligations may have to be repaid to the GOI if the 
obligations under the licenses are not met. Consistent with our 
practice and prior determinations, we are treating the unpaid import 
duty liability as an interest-free loan. See 19 CFR 351.505(d)(1), PET 
Film Final Determination, and accompanying Issues and Decision 
Memorandum, at ``EPCGS''; see also Final Affirmative Countervailing 
Duty Determination: Bottle-Grade Polyethylene Terephthalate (PET) Resin 
From India, 70 FR 13460 (March 21, 2005), and accompanying Issues and 
Decision Memorandum at ``Export Promotion Capital Goods Scheme 
(EPCGS).''

[[Page 47562]]

    The amount of the unpaid duty liabilities 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 officially waived by the GOI. Accordingly, we find 
the benefit to be the interest that Ester would have paid during the 
POR had it borrowed the full amount of the duty reduction or exemption 
at the time of importation. See, e.g., PET Film Preliminary Results of 
2003 Review, 70 FR at 46488, unchanged in PET Film Final Results of 
2003 Review.
    As stated above under this section, the time period for fulfilling 
the export requirement expires eight years after importation of the 
capital good. As such, 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 to fulfill the export commitment) occurs 
at a point in time that is more than one year after the date of 
importation of the capital goods (i.e., under the EPCGS program, the 
time period for fulfilling the export commitment is more than one year 
after importation of the capital good). As the benchmark interest rate, 
we used the weighted-average interest rate from all of Ester's 
comparable commercial long-term, rupee-denominated loans for the year 
in which the capital good was imported. For the years where Ester did 
not have any comparable long-term commercial loans, we used the loans 
from the preceding year or the national average interest rates from the 
IMF Statistics pursuant to 19 CFR 351.505(a)(2)(iii) and (a)(3)(ii). 
See ``Benchmarks Interest Rates and Discount Rates'' section above for 
a discussion of the applicable benchmark. We then multiplied the total 
amount of unpaid duties under each license by the long-term benchmark 
interest rate for the year in which the capital good was imported and 
summed these amounts to determine the total benefit from these 
contingent liability loans.
    The benefit received under the EPCGS is the sum of: (1) The benefit 
attributable to the POR from the formally waived duties for imports of 
capital equipment for which the respondents met export requirements by 
the end of the POR; and (2) interest due on the contingent-liability 
loans for imports of capital equipment that have not met export 
requirements. We then divided the total benefit received by Ester under 
the EPCGS program by Ester's total exports, inclusive of deemed 
exports, to determine a countervailable subsidy of 30.97 percent ad 
valorem.
3. Duty Entitlement Passbook Scheme (DEPS)
    India's DEPS was enacted on April 1, 1997, as a successor to the 
Passbook Scheme (PBS). As with PBS, DEPS enables exporting companies to 
earn import duty exemptions in the form of passbook credits rather than 
cash. All exporters are eligible to earn DEPS credits on a post-export 
basis, provided that the GOI has established a standard input-output 
norm for the exported product. DEPS credits can be applied to 
subsequent imports of any materials, 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 on the export sales from which the DEPS credits are earned.
    The Department has previously determined that DEPS is 
countervailable. See, e.g., PET Film Final Determination, and 
accompanying Issues and Decision Memorandum at ``DEPS.'' In the 
investigation, the Department determined that, under DEPS, a financial 
contribution, as defined under section 771(5)(D)(ii) of the Act, is 
provided because the GOI provides credits for the future payment of 
import duties. Moreover, the GOI does not have in place and does not 
apply a system that is reasonable and effective to confirm which 
inputs, and in what amounts, are consumed in the production of the 
exported products. Id. Therefore, under section 771(5)(E) of the Act 
and 19 CFR 351.519(a)(4), the entire amount of import duty exemption 
earned during the POI constitutes a benefit. Finally, this program is 
only available to exporters and, therefore, it is specific under 
sections 771(5A)(B) of the Act. No new information or evidence of 
changed circumstances has been presented in this review to warrant 
reconsideration of this finding. Therefore, we continue to find that 
the DEPS is countervailable.
    In accordance with past practice and pursuant to 19 CFR 
351.519(b)(2), we find that benefits from the DEPS are conferred as of 
the date of exportation of the shipment for which the pertinent DEPS 
credits are earned. See, e.g., Final Affirmative Countervailing Duty 
Determination: Certain Cut-to-Length Carbon-Quality Steel Plate From 
India, 64 FR 73131, 73134 and Comment 4 (December 29, 1999) (Final 
Determination Carbon Steel Plate from India). We calculated the benefit 
on an as-earned basis upon export because DEPS credits are provided as 
a percentage of the value of the exported merchandise on a shipment-by-
shipment basis and, as such, it is at this point that recipients know 
the exact amount of the benefit (e.g., the duty exemption).
    Ester reported that it received post-export credits under the DEPS 
during the POR. Because DEPS credits are earned on a shipment-by-
shipment basis, we normally calculate the subsidy rate by dividing the 
benefit earned on subject merchandise exported to the United States by 
total exports of subject merchandise to the United States during the 
POR. See, e.g., Final Determination Carbon Steel Plate from India, 64 
FR at 73134. Ester reported that it earned DEPS credits on exports of 
both subject and non-subject merchandise. Although Ester reported that 
it was able to separate the DEPS credits earned on exports to the 
United States in the DEPS data it provided to the Department, our 
analysis indicates that Ester earned DEPS credits for shipments of 
subject and non-subject merchandise as well as for shipments to 
multiple countries on the same DEPS license. Therefore, since we are 
unable to tie the benefits received to subject merchandise in 
accordance with 19 CFR 525(b)(5), we have calculated the subsidy rate 
using the value of all DEPS export credits that Ester earned during the 
POR. We divided the total amount of the benefit by Ester's total export 
sales to all markets, net of deemed exports, during the POR.
    On this basis, we preliminarily determine Ester's countervailable 
subsidy from DEPS to be 74.25 percent ad valorem.

B. Programs Preliminarily Determined To Be Not Used

    We preliminarily determine that Ester did not apply for or receive 
benefits during the POR under the programs listed below:
GOI Programs
    1. Duty Free Replenishment Certificate (DFRC) (GOI).
    2. Target Plus Scheme (GOI).
    3. Capital Subsidy (GOI).
    4. Exemption of Export Credit from Interest Taxes (GOI).
    5. Loan Guarantees from the GOI.
State Programs
    6. State Sales Tax Incentive Schemes.
    7. Octroi Refund Scheme State of Maharashtra (SOM).
    8. Waiving of Interest on Loans by SICOM Limited (SOM).
    9. State of Uttar Pradesh (SUP) Capital Incentive Scheme.
    10. Infrastructure Assistance Schemes (State of Gujarat).

[[Page 47563]]

    11. Capital Incentive Scheme Uttaranchel.
    12. Capital Incentive Schemes (SOM).
    13. Electricity Duty Exemption Scheme (SOM).
    14. Union Territories Sales Tax Exemption.

Preliminary Results of Administrative Review

    In accordance with section 751(a)(2)(B)(i) of the Act and 19 CFR 
351.221(b)(4)(i), we have calculated an individual subsidy rate for 
Ester for the POR. We preliminarily determine the total countervailable 
subsidy to be 112.95 percent ad valorem for Ester.

Assessment Rates/Cash Deposits

    If these preliminary results are adopted in our final results of 
this review, the Department intends to issue assessment instructions to 
U.S. Customs and Border Protection (CBP) 15 days after publication of 
the final results of this review.
    The Department also intends to instruct CBP to collect cash 
deposits of estimated countervailing duties at the rate of 112.95 
percent ad valorem of the entered value on shipments of the subject 
merchandise produced and exported by Ester, and entered, or withdrawn 
from warehouse, for consumption on or after the date of publication of 
the final results of this review. We intend to instruct CBP to continue 
to collect cash deposits for non-reviewed companies at the applicable 
company-specific CVD rate for the most recent period or all-others rate 
established in the investigation. These deposit rates, when imposed, 
shall remain in effect until further notice.

Disclosure and Public Hearing

    We will disclose the calculations used in our analysis to parties 
to this segment of the proceeding within ten days of the public 
announcement of these preliminary results of review. See 19 CFR 
351.224(b). Interested parties who wish to request a hearing on 
arguments to be raised in case or rebuttal briefs, must submit a 
written request within 30 days of the date of publication of this 
notice. See 19 CFR 351.310(c). Requests should contain: (1) The party's 
name, address and telephone number; (2) the number of participants; and 
(3) to the extent practicable, a list of arguments to be raised.
    Pursuant to 19 CFR 351.309, interested parties may submit written 
comments in response to these preliminary results. Unless the time 
period is extended by the Department, case briefs are to be submitted 
within 30 days after the date of publication of this notice in the 
Federal Register. See 19 CFR 351.309(c). Rebuttal briefs, which must be 
limited to responding to arguments raised in case briefs, are to be 
submitted no later than five days after the time limit for filing case 
briefs. See 19 CFR 351.309(d). Parties who submit arguments in this 
proceeding are requested to submit with the argument: (1) A statement 
of the issues; (2) a brief summary of the argument; and (3) a table of 
authorities cited. Further, we request that parties submitting written 
comments provide the Department with a diskette containing an 
electronic copy of the public version of such comments. Case and 
rebuttal briefs must be served on interested parties, in accordance 
with 19 CFR 351.303(f).
    Unless extended, the Department will issue the final results of 
this administrative review, including the results of its analysis of 
issues raised in any written briefs, not later than 120 days after the 
date of signature of this notice, pursuant to section 751(a)(3)(A) of 
the Act.
    These preliminary results are issued and published in accordance 
with sections 751(a)(1) and 777(i)(1) of the Act, and 19 CFR 
351.221(b)(4).

    Dated: August 1, 2011.
Ronald K. Lorentzen,
Deputy Assistant Secretary for Import Administration.
[FR Doc. 2011-19949 Filed 8-4-11; 8:45 am]
BILLING CODE 3510-DS-P