Certain Hot-Rolled Carbon Steel Flat Products From India: Final Results of Countervailing Duty Administrative Review

AGENCY:

Import Administration, International Trade Administration, Department of Commerce.

SUMMARY:

On January 11, 2010, the U.S. Department of Commerce (the Department) published in the Federal Register its preliminary results of the administrative review of the countervailing duty (CVD) order on certain hot-rolled carbon steel flat products (hot-rolled carbon steel) from India for the period of review (POR) January 1, 2008, through December 31, 2008. See Certain Hot-Rolled Carbon Steel Flat Products from India: Preliminary Results of Countervailing Duty Administrative Review; 75 FR 1495 (January 11, 2010) (Preliminary Results). We preliminarily found that Tata Steel Limited (Tata) received countervailable subsidies during the POR. We received comments on our Preliminary Results from the Government of India (GOI), petitioners, and the respondent company, Tata. The final results are listed in the section “Final Results of Review” below.

DATES:

Effective Date: July 26, 2010.

FOR FURTHER INFORMATION CONTACT:

Gayle Longest at (202) 482-3338, AD/CVD Operations, Office 3, Import Administration, International Trade Administration, U.S. Department of Commerce, 14th Street and Constitution Ave., NW., Washington, DC 20230.

SUPPLEMENTARY INFORMATION:

Background

On December 3, 2001, the Department published in the Federal Register the CVD order on certain hot-rolled carbon steel flat products from India. See Notice of Amended Final Determination and Notice of Countervailing Duty Order: Certain Hot-Rolled Carbon Steel Flat Products from India, 66 FR 60198 (December 3, 2001). On February 2, 2009, the Department initiated an administrative review covering Essar Steel Limited (Essar), Ispat Industries Limited (Ispat), JSW Steel Limited (JSW), and Tata. See Initiation of Antidumping and Countervailing Duty Administrative Reviews and Requests for Revocation in Part, 74 FR 5821 (February 2, 2009) (Initiation). As a result of withdrawals of request for review, the Department rescinded this review, in part, with respect to Essar, Ispat, and JSW. See Certain Hot-Rolled Carbon Steel Flat Products from India: Partial Rescission of Countervailing Duty Administrative Review, 74 FR 26847 (June 4, 2009).

On January 11, 2010, the Department published in the Federal Register its Preliminary Results of the administrative review of this order for the period January 1, 2008, through December 31, 2008. See Preliminary Results, 75 FR 1495. In accordance with 19 CFR 351.213(b), this administrative review covers Tata, a producer and exporter of subject merchandise.

In the Preliminary Results, we invited interested parties to submit briefs or request a hearing. On February 12, 2010, we received comments from the GOI and Tata. On February 19, 2010, we received rebuttal comments from petitioners.

Scope of Order

The merchandise subject to this order is certain hot-rolled carbon-quality steel products of a rectangular shape, of a width of 0.5 inch or greater, neither clad, plated, nor coated with metal and whether or not painted, varnished, or coated with plastics or other non-metallic substances, in coils (whether or not in successively superimposed layers), regardless of thickness, and in straight lengths, of a thickness of less than 4.75 mm and of a width measuring at least 10 times the thickness. Universal mill plate (i.e., flat-rolled products rolled on four faces or in a closed box pass, or a width exceeding 150 mm, but not exceeding 1250 mm, and of a thickness of not less than 4 mm, not in coils and without patterns in relief) of a thickness not less than 4.0 mm is not included within the scope of this order.

Specifically included in the scope of this order are vacuum degassed, fully stabilized (commonly referred to as interstitial-free (IF) steels, high-strength low-alloy (HSLA) steels, and the substrate for motor lamination steels. IF steels are recognized as low-carbon steels with micro-alloying levels of elements such as titanium or niobium (also commonly referred to as columbium), or both, added to stabilize carbon and nitrogen elements. HSLA steels are recognized as steels with micro-alloying levels of elements such as chromium, copper, niobium, vanadium, and molybdenum. The substrate for motor lamination steels contains micro-alloying levels of elements such as silicon and aluminum.

Steel products included in the scope of this order, regardless of definitions in the Harmonized Tariff Schedule of the United States (HTS), are products in which: (i) Iron predominates, by weight, over each of the other contained elements; (ii) the carbon content is 2 percent or less, by weight; and (iii) none of the elements listed below exceeds the quantity, by weight, respectively indicated:

1.80 percent of manganese, or

2.25 percent of silicon, or

1.00 percent of copper, or

0.50 percent of aluminum, or

1.25 percent of chromium, or

0.30 percent of cobalt, or

0.40 percent of lead, or

1.25 percent of nickel, or

0.30 percent of tungsten, or

0.10 percent of molybdenum, or

0.10 percent of niobium, or

0.15 percent of vanadium, or

0.15 percent of zirconium.

All products that meet the physical and chemical description provided above are within the scope of this order unless otherwise excluded. The following products, by way of example, are outside or specifically excluded from the scope of this order.

• Alloy hot-rolled steel products in which at least one of the chemical elements exceeds those listed above (including, e.g., ASTM specifications A543, A387, A514, A517, A506).
• SAE/AISI grades of series 2300 and higher.
• Ball bearings steels, as defined in the HTS.
• Tool steels, as defined in the HTS.
• Silico-manganese (as defined in the HTS) or silicon electrical steel with a silicon level exceeding 2.25 percent.
• ASTM specifications A710 and A736.
• USS Abrasion-resistant steels (USS AR 400, USS AR 500).
• All products (proprietary or otherwise) based on an alloy ASTM specification (sample specifications: ASTM A506, A507).
• Non-rectangular shapes, not in coils, which are the result of having been processed by cutting or stamping and which have assumed the character of articles or products classified outside chapter 72 of the HTS.

The merchandise subject to this order is currently classifiable in the HTS at subheadings: 7208.10.15.00, 7208.10.30.00, 7208.10.60.00, 7208.25.30.00, 7208.25.60.00, 7208.26.00.30, 7208.26.00.60, 7208.27.00.30, 7208.27.00.60, 7208.36.00.30, 7208.36.00.60, 7208.37.00.30, 7208.37.00.60, 7208.38.00.15, 7208.38.00.30, 7208.38.00.90, 7208.39.00.15, 7208.39.00.30, 7208.39.00.90, 7208.40.60.30, 7208.53.00.00, 7208.54.00.00, 7208.90.00.00, 7211.14.00.90, 7211.19.15.00, 7211.19.20.00, 7211.19.30.00, 7211.19.45.00, 7211.19.60.00, 7211.19.75.30, 7211.19.75.60, and 7211.19.75.90. Certain hot-rolled flat-rolled carbon-quality steel covered by this order, including: Vacuum-degassed fully stabilized; high-strength low-alloy; and the substrate for motor lamination steel may also enter under the following tariff numbers: 7225.11.00.00, 7225.19.00.00, 7225.30.30.50, 7225.30.70.00, 7225.40.70.00, 7225.99.00.90, 7226.11.10.00, 7226.11.90.30, 7226.11.90.60, 7226.19.10.00, 7226.19.90.00, 7226.91.50.00, 7226.91.70.00, 7226.91.80.00, and 7226.99.00.00. Subject merchandise may also enter under 7210.70.30.00, 7210.90.90.00, 7211.14.00.30, 7212.40.10.00, 7212.40.50.00, and 7212.50.00.00. Although the HTS subheadings are provided for convenience and customs purposes, the Department's written description of the merchandise subject to this order is dispositive.

Period of Review

The POR for which we are measuring subsidies is from January 1, 2008, through December 31, 2008.

Analysis of Comments

On February 12, 2010 the GOI and Tata filed comments. On February 19, 2010, petitioners filed rebuttal comments. All issues in the respondents' and petitioners' case and rebuttal briefs are addressed in the accompanying Issues and Decision Memorandum for the Countervailing Duty Administrative Review on Certain Hot-Rolled Carbon Steel Flat Products from India (Decision Memorandum), which is hereby adopted by this notice. A listing of the issues that parties raised and to which we have responded is attached to this notice as Appendix I. Parties can find a complete discussion of the issues raised in this review and the corresponding recommendations in this public memorandum, which is on file in the Central Records Unit (CRU) of the main commerce building. In addition, a complete version of the Decision Memorandum can be accessed directly on the World Wide Web at http://ia.ita.doc.gov/frn.

The paper copy and the electronic version of the Decision Memorandum are identical in content.

Final Results of Review

After reviewing comments from all parties, we have made adjustments to our calculations as explained in our Decision Memorandum. Consistent with the Preliminary Results, we find that Tata received countervailable subsidies during the POR.

Assessment Rates/Cash Deposits

The Department intends to issue assessment instructions to U.S. Customs and Border Protection (CBP) 15 days after the date of publication of these final results of review to liquidate shipments of subject merchandise by Tata entered, or withdrawn from warehouse, for consumption on or after January 1, 2008, through December 31, 2008, at the ad valorem rate listed above. We will also instruct CBP to collect cash deposits for the respondent at the countervailing duty rate indicated above on all shipments of the subject merchandise entered, or withdrawn from warehouse, for consumption on or after the date of publication of these final results of review.

For all non-reviewed companies, the Department will instruct CBP to assess countervailing duties at the cash deposit rates in effect at the time of entry, for entries between January 1, 2008, and December 31, 2008. The cash deposit rates for all companies not covered by this review are not changed by the results of this review.

Return or Destruction of Proprietary Information

This notice serves as a reminder to parties subject to administrative protective order (APO) of their responsibility concerning the disposition of proprietary information disclosed under APO in accordance with 19 CFR 351.305(a)(3). Timely written notification of return or destruction of APO materials or conversion to judicial protective order is hereby requested. Failure to comply with the regulations and the terms of an APO is a sanctionable violation.

We are issuing and publishing these results in accordance with sections 751(a)(1) and 777(i)(1) of the Tariff Act of 1930, as amended.

Appendix I—Issues and Decision Memorandum

I. Adverse Facts Available (AFA)

A. The GOI

B. Tata

II. Analysis of Programs

A. Programs Administered by the Government of India

1. Pre- and Post-Shipment Export Financing

2. Export Promotion Capital Goods Scheme (EPCGS)

3. Advance License Program (ALP)

4. Duty Entitlement Passbook Scheme (DEPS)

5. Status Certificate Program

6. Loan Guarantees From the GOI

7. Steel Development Fund (SDF) Loans

8. Captive Mining of Iron Ore

9. Captive Mining Rights of Coal

10. Export Oriented Units (EOU) Program: Duty-Free Import of Capital Goods and Raw Materials

11. EOU Program: Reimbursement of Central Sales Tax (CST) Paid on Materials Procured Domestically

12. Sale of High-Grade Iron Ore for Less Than Adequate Remuneration (LTAR)

13. Market Development Assistance (MDA)

14. Market Access Initiative (MAI)

15. Special Economic Zone Act of 2005 (SEZ Act): Duty Free Import/Domestic Procurement of Goods and Services for Development, Operation, and Maintenance of SEZ Units Program

16. SEZ Act: Exemption From Excise Duties on Goods Machinery and Capital Goods Brought From the Domestic Tariff Area for Use by an Enterprise in the SEZ

17. SEZ Act: Drawback on Goods Brought or Services Provided From the Domestic Tariff Area Into a SEZ, or Services Provided in a SEZ by Service Providers Located Outside India

18. SEZ Act: 100 Percent Exemption From Income Taxes on Export Income From the First 5 Years of Operation, 50 Percent for the Next 5 Years, and a Further 50 Percent Exemption on Export Income Reinvested in India for an Additional 5 Years

19. SEZ Act: Exemption From the Central Sales Tax (CST)

20. SEZ Act: Exemption From the National Service Tax

21. Duty Free Replenishment Certificate (DFRC) Scheme

22. Target Plus Scheme (TPS)

B. Programs Administered by the State Government of Gujarat

1. State Government of Gujarat (SGOG) Tax Incentives: Sales Tax Exemptions of Purchases of Goods During the POR

2. State Government of Gujarat (SGOG) Tax Incentives: Deferrals on Purchases of Goods From Prior Years (as Well as Deferrals Granted During the POR

3. State Government of Gujarat (SGOG) Tax Incentives: Value Added Tax (VAT)

4. Gujarat Special Economic Zone Act (SGOG SEZ Act): Stamp Duty and Registration Fees for Land Transfers, Loan Agreements, Credit Deeds, and Mortgages

5. SGOG SEZ Act: Sales Tax, Purchase Tax, and Other Taxes Payable on Sales and Transactions

6. SGOG SEZ Act: Sales and Other State Taxes on Purchases of Inputs (Both Goods and Services) for the SEZ or a Unit within the SEZ

C. Programs Administered by the State Government of Maharashtra (SGOM)

1. Sales Tax Program

2. VAT Tax Refunds Under the SGOM Package Scheme of Incentives and the Maharashtra New Package Scheme of Incentives

3. Electricity Duty Exemption Under the Package Scheme of Incentives for 1993

4. Refunds of Octroi Under the PSI of 1993, Maharashtra Industrial Policy (MIP of 2001), and Maharashtra Industrial Policy (MIP of 2006)

5. Loan Guarantees Based on Octroi Refunds by SGOM

6. Infrastructure Assistance for Mega Projects

7. Land for Less Than Adequate Remuneration

8. Investment Subsidy

D. Programs Administered by the State Government of Andhra Pradesh (SGAP)

1. Grant Under the Industrial Investment Promotion Policy of 2005-2010 (Andhra Pradesh IP): 25 Percent Reimbursement of Cost of Land in Industrial Estates and Industrial Development Areas

2. Grant Under the Andhra Pradesh IP: Reimbursement of Power at the Rate of Rs. 0.75 “Per Unit” for the Period Beginning April 1, 2005, through March 31, 2006 and for the Four Years Thereafter to be Determined by the Government of Andhra Pradesh (GOAP)

3. Grant Under the Andhra Pradesh IP: A 50 Percent Subsidy for Expenses Incurred for Quality Certification Up to RS. 100 Lakhs

4. Grant Under the Andhra Pradesh IP: A 25 Percent Subsidy on “Cleaner Production Measures” Up to Rs. 5 Lakhs

5. Grant Under the Andhra Pradesh IP: A 50 Percent Subsidy on Expenses Incurred in Patent Registration, up to Rs. 5 Lakhs

6. Tax Incentives Under the Andhra Pradesh IP: 100 Percent Reimbursement of Stamp Duty and Transfer Duty Paid for the Purchase of Land and Buildings and the Obtaining of Financial Deeds and Mortgages

7. Tax Incentives Under the Andhra Pradesh IP: A Grant of 25 Percent of the Tax Paid to SGAP, Which is Applied as a Credit Against the Tax Owed the Following Year, for a Period of Five Years From the Date of Commencement of Production

8. Tax Incentives Under the Andhra Pradesh IP: Exemption From the SGAP Non-agricultural Land Assessment (NALA)

9. Provision of Goods/Services for Less Than Adequate Remuneration Under the Andhra Pradesh IP: Provision of Infrastructure for Industries Located More Than 10 Kilometers From Existing Industrial Estates or Industrial Development Areas

E. Programs Administered by the State Government of Chhattisgarh (SGOC)

1. Grant Under the Chhattisgarh Industrial Policy 2004-2009 (CIP): A Direct

Subsidy of 35 Percent of Total Capital Cost for the Project, up to a Maximum Amount Equivalent to the Amount of Commercial Tax/Central Sales Tax Paid in a Seven Year Period

2. Grant Under the CIP: A Direct Subsidy of 40 Percent Toward Total Interest Paid for a Period of 5 Years (up to Rs. Lakh per Year) on Loans and Working Capital for Upgrades in Technology

3. Grant Under the CIP: Reimbursement of 50 Percent of Expenses (up to Rs. 75,000) Incurred for Quality Certification

4. Grant Under the CIP: Reimbursement of 50 Percent of Expenses (up to 5 Lakh) for Obtaining Patents

5. Tax Incentives Under the CIP: Total Exemption From Electricity Duties for a Period of 15 Years From the Date of Commencement of Commercial Production

6. Tax Incentives Under the CIP: Exemption from Stamp Duty on Deeds Executed for Purchase or Lease of Land and Buildings and Deeds Relating to Loans and Advances To Be Taken by the Company for a Period of Three Years From the Date of Registration

7. Tax Incentives Under the CIP: Exemption From Payment of Entry Tax for 7 Years (Excluding Minerals Obtained from Mining in the State)

8. Tax Incentives Under the CIP: A 50 Percent Reduction of the Service Charges for Acquisition of Private Land by Chhattisgarh Industrial Development Corporation for Use by the Company

9. Land for Less Than Adequate Remuneration (LTAR) Under CIP

F. Programs Administered by the State Government of Jharkland (SGOJ)

1. Tax Incentives Under the Jharkhand State Industrial Policy (JSIP) of 2001: Exemption of Electricity Duties

2. Tax Incentives Under the JSIP: Offset of Jharkhand Sales Tax (JST)

3. Grants Under the JSIP: Capital Investment Incentive

4. Grants Under the JSIP: Capital Power Generating Subsidy

5. Grants Under the JSIP: Interest Subsidy

6. Tax Incentives Under the JSIP: Stamp Duty and Registration

7. Grants Under the JSIP: Feasibility Study and Project Report Cost Reimbursement

8. Grants Under the JSIP: Pollution Control Equipment Subsidy

9. Grants Under the JSIP: Incentive for Quality Certification

10. Infrastructure Subsidies to Mega Projects: Tax Incentives

11. Infrastructure Subsidies to Mega Projects: Grants

12. Infrastructure Subsidies to Mega Projects: Loans

13. Employment Incentives Under the JSIP

G. Programs Administered by the State Government of Karnataka (SGOK)

1. SGOK's New Industrial Policy and Package of Incentives and Concessions of 1993 (1993 KIP): Tax Incentives

2. 1993 KIP: Land at Less Than Adequate Remuneration

3. 1993 KIP: Iron Ore, Limestone, and Dolomite at Less Than Adequate Remuneration

4. 1993 KIP: Power/Electricity at Less Than Adequate Remuneration

5. 1993 KIP: Water at Less Than Adequate Remuneration

6. 1993 KIP: Roads and Other Infrastructure at Less Than Adequate Remuneration

7. 1993 KIP: Port Facilities at Less Than Adequate Remuneration

8. 1993 KIP: Grants

9. 1993 KIP: Loans

10. 1993 KIP: Tax Incentives

11. SGOK's New Industrial Policy and Package of Incentives and Concessions of 1996 (1996 KIP): Loans

12. 1996 KIP: Grants

13. 1996 KIP: Provision of Goods and Services at Less Than Adequate Remuneration (LTAR)

14. SGOK's New Industrial Policy and Package of Incentives and Concessions of 2001 (2001 KIP): Tax Incentives

15. 2001 KIP: Loans

16. 2001 KIP: Grants

17. 2001 KIP: Provision of Goods and Services at Less Than Adequate Remuneration (LTAR)

18. SGOK's New Industrial Policy and Package of Incentives and Concessions of 2006 (2006 KIP): Loans

19. 2006 KIP: Tax Incentives

20. 2006 KIP: Provision of Goods and Services for Less Than Adequate Remuneration (LTAR)

21. 2006 KIP: Grants

Programs Determined To Be Terminated

1. Exemption of Export Credit From Interest Taxes

2. Income Tax Exemption Scheme Under Section (80 HHC)

III. Analysis of Comments

Comment 1: Whether The State Government Of Jharkhand (SGOJ) Cooperated To The Best Of Its Ability And Should Not Be Subject To The AFA Rate That The Department Preliminarily Applied To The SGOJ Programs

Comment 2: Whether The Programs Covered In The Review Have Provided Countervailable Benefits To Indian Exporters

Comment 3: Whether The Department Should Have Held Consultations With The GOI Before Including Many Of The Programs In Its Administrative Review

Comment 4: Whether The Application of The Adverse Facts Available (AFA) Standard Is Inconsistent With Article 12/7 Of WTO's ASCM

Comment 5: Whether The AFA Rates Arrived At For The SGOJ Programs Have No Rational Connection To Tata's Operations And Are Improper

Comment 6: Whether The Application Of AFA Rates To Programs Administered By The State Governments Contradicts The Department's Prior Determinations In This Proceeding

Comment 7: Whether The Department's Calculation Methodology Is Incorrect As It Improperly Summed The Total Of The GOI And State-Government AFA Rates Without Properly Accounting For The Percentage Of Tata's Total Turnover That The State Programs Could Have Applied To

Comment 8: Whether The Department Made A Clerical Error In The Calculation Of The AFA Rate For SGOJ Programs

Comment 9: Whether The Department's Discretion In Selecting AFA Margins Is Limited By The Requirement That Margins Be Reasonable, Reasonably Accurate Estimates Of Actual Margins, And Rationally Related To Practices In The Industry

Comment 10: Whether The AFA Margin From The Preliminary Results Is An Abuse Of The Department's Discretion Because It Is Claimed To Be Unreasonable, Anomalous, And Unrelated To The Country, The Industry, Or The Company

Comment 11: Whether The 586.43% Preliminary Margin Is Unlawful Because It Is Excessively High And Therefore Punitive

Comment 12: Whether The Department Improperly Applied To Tata Steel Numerous State Programs Relating To States Where Tata Steel Is Not Located

IV. Total Net Subsidy Rate

V. Recommendation