91-118

NOTICES

DEPARTMENT OF COMMERCE

[C-533-063]

Final Results of Countervailing Duty Administrative Review: Certain Iron-Metal
Castings From India

Friday, January 18, 1991

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

ACTION: Notice.

SUMMARY: We determine that net subsidies are being provided to manufacturers or
exporters in India of certain iron-metal castings (castings), as described in the "Scope of
the Review" section of this notice.

EFFECTIVE DATE: January 18, 1991.

FOR FURTHER INFORMATION CONTACT: Carole Showers or Margot Paijmans, Office of
Countervailing Investigations, Import Administration, International Trade
Administration, U.S. Department of Commerce, Washington, DC 20230 on (202) 377-
3217 or (202) 377-1442.

SUPPLEMENTARY INFORMATION:

Final Results

We determine that net subsidies within the meaning of section 701 of the Tariff Act of 1930,
as amended (the Act), are being provided to manufacturers or exporters in India of certain
iron-metal castings. This review covers the period of January 1, 1986 through December 31,
1986 and the following programs:
- International Price Reimbursement Scheme
- Cash Compensatory Support Scheme
- Pre-Shipment Export Loans
- Income Tax Reductions
- Market Development Assistance Grants
- Sales of Import Replenishment Licenses
- Extension of Free Trade Zones
- Preferential Freight Rates
- Import Duty Exemptions Available to 100 Percent Export-Oriented Units
- Post-Shipment Financing
The weighted-average net subsidies are shown in the "Final Results of Administrative
Review" section of this notice.

Case History

On October 16, 1980, the Department published its countervailing duty order

*1977

in
its investigation of certain iron-metal castings from India. On December 10, 1990, the
Department published the final results of its most recently completed administrative review
for the period January 1, 1985 through December 31, 1985 (55 FR 50747).
Since the preliminary results of the review in this case (55 FR 46699, November 6, 1990),
the Department held a hearing on December 11, 1990. The Department has now completed
the 1986 administrative review in accordance with section 751 of the Tariff Act of 1930 (the
Tariff Act.)

Scope of Review

The imports covered by this review are shipments of Indian manhole covers and frames,
clean-out covers and frames, and catch basin grates and frames. These articles are
commonly called municipal or public works castings and are used for access or for drainage
for public utility, water, and sanitary systems. During the review period, this merchandise
was classifiable under Tariff Schedules of the United States Annotated (TSUSA) item
numbers 657.0950 and 657.0990. This merchandise is currently classifiable under
Harmonized Tariff Schedule (HTS) item numbers 7325.10.0010 and 7325.10.0050. The
TSUSA and HTS item numbers are provided for convenience and Customs purposes. The
written description remains dispositive.

Analysis of Comments Received

We afforded interested parties an opportunity to comment on the preliminary results. We
received comments from the Indian exporters, two separate groups of U.S. importers and
the petitioners.
The issues raised by the parties with respect to the International Price Reimbursement
Scheme (IPRS) program in the case and rebuttal briefs were in essence identical to those
raised by the parties in their briefs for the 1985 review. The final results of that review were
published in December 1990. The information on the record and the Department's position
with respect to these comments have not changed. Therefore, we have restated here those
comments and "Department Positions" that were in the 1985 review that pertain to the
instant review.

Comment 1: The exporters and importers argue that IPRS payments are not countervailable
subsidies. In intent and practice, the IPRS refunds to exporters of castings the difference
between the price they must pay for certain raw materials purchased from
government-owned Indian producers and the price they would otherwise pay on the world
market. The program was operated in a manner consistent with item (d) of the Illustrative
List of Export Subsidies annexed to the Agreement on Interpretation and Application of
Articles VI, XVI, and XXIII of the General Agreement on Tariffs and Trade (the List) which
states:
The delivery by governments or their agencies of imported or domestic products or
services for use in the production of exported goods, on terms or conditions more
favorable than for delivery of like or directly competitive products or services for use in the
production of goods for domestic consumption, if (in the case of products) such terms or
conditions are more favorable than those commercially available on world markets to their
exporters (emphasis added).
Item (d) of the List is thus explicit that the provision of raw materials at world market prices
to exporters is not a subsidy. The Department recognized this in previous countervailing
duty cases, namely in Final Negative Countervailing Duty Determination; Certain Steel
Wire Nails from the Republic of Korea (47 FR 39549; September 8, 1982) (Korea Nails), the
Department held that "price preferences for inputs to be used in the production of export
goods constitute a subsidy only if the preference lowers the price of that input below that
which the input purchaser would pay on world markets." Similarly, in Final Negative
Countervailing Duty Determination; Oil Country Tubular Goods from Taiwan (51 FR
19583; May 30, 1986) (Taiwanese OCTG), the Department stated that:
Based on an examination of China Steel's second-tier prices for hot-rolled coil used in the
production of OCTG, and of the world market prices for such coil, we found that China Steel's
prices were at world market levels; therefore, we determine that China Steel's two-tiered
pricing policy does not confer a countervailable benefit within the meaning of the
countervailing duty law.
Furthermore, the exporters state that there is no evidence in the statutes or in the
legislative history to support a theory that Congress intended to reject the principle
embodied in item (d) of the List when it enacted the Trade Agreements Act of 1979 (the
TAA). In fact, the importers claim that this issue was examined by the U.S. Treasury
Department in a countervailing duty investigation that predates the 1979 statute (see,
Final Countervailing Duty Determination; Leather Wearing Apparel from Uruguay (43
FR 3974; January 30, 1978) (Uruguayan Leather Apparel). According to the importers,
Treasury determined that direct payments to exporters of apparel that lowered the price of
their primary input, hides, to the "readily available price of hides the other markets" was not
a subsidy.
The exporters also argue that the IPRS benefits not the exporter of castings, but rather the
Indian pig iron producers. Castings exporters can import pig iron or purchase domestic pig
iron at the relatively high price that is set by the Indian government and receive IPRS
rebates. The net effects of these two alternatives are the same.
In addition, exporters argue that the Department is attempting to use an unauthorized
interpretation of U.S. law to find the Indian IPRS program countervailable. In Certain
Cotton Yarn Products from Brazil; Final Results of Countervailing Duty Administrative
Review (55 FR 3442; February 1, 1990) (Cotton Yarn), the Department determined as
countervailable a similar Brazilian dual pricing scheme, the Price Equalization Program
(PEP). In Cotton Yarn, the Department advanced the theory that the List is not controlling
on the identification of subsidies: "It is irrelevant whether the PEP is consistent with item (d)
or whether cotton yarn exporters could have exported raw cotton at world market prices.
We are concerned with the alternative price commercially available in the domestic market"
(55 FR 3446). Importers argue that such a theory is untenable because Congress
incorporated the List into U.S. countervailing duty law and the Department has no
authority to claim item (d) as "irrelevant." The Court of International Trade (CIT) has
acknowledged the adoption of the List in U.S. law in its decision in Fabricas El Carmen, S.A.
de C.V., et al.. v. United States, Slip Op. 87-113 (CIT October 7, 1987), as did the U.S. Court
of Appeals in its decision of the 1984 review of this countervailing duty order (see RSI
(India) Pvt., Ltd. v. United States, 687 F.2d 1571 (Fed. Cir. 1989)). The legislative history
confirms that the sole reservation expressed by Congress in adopting the List was that it not
be regarded as a permanent, exhaustive listing of all export subsidies countervailable under
U.S. law. The Department is empowered only to supplement or expand the existing List, not
alter or ignore established principles of the List. Consequently, in the case of item (d), U.S.
law specifically excludes from countervailability any such programs which do not result in
the provision of inputs on terms more favorable than those obtainable on world markets.
Furthermore, the Department's failure to observe the principle of the statutory language
and item (d) also directly conflicts with its efforts to codify item (d) in its own

*1978

regulations. Commerce's proposed Regulation 355.44(h) in 19 CFR part 355
Countervailing Duties; Notice of Proposed Rulemaking and Request for Public
Comments (54 FR 23366; May 31, 1989) clearly states that price preferences for inputs used
in the production of goods for export are subsidies only if they are provided on terms or
conditions "are more favorable than those commercially available on world markets to their
exporters."
Conversely, petitioners argue that the IPRS is a countervailable subsidy because the
exception in item (d) applies only to the preferential pricing of inputs and not to payments
contingent upon the exportation of finished goods. Petitioner maintains that the
Department's interpretation of item (d) has always been a narrow one, i.e., the exception in
item (d) applies only to inputs, not monetary payments. Such an interpretation of item (d) is
consistent with a panel report of the GATT Committee on Subsidies and Countervailing
Measures that examined item (d) in conjunction with an investigation of European
Community pasta export payments. See GATT Panel Report on EEC Subsidies on Export
Pasta Products, SCM/433 (May 19, 1983). The Department's determination in Cotton Yarn,
that the Brazilian PEP program is countervailable, is consistent with past Department
determinations that reflect a narrow interpretation of the exception in item (d). The
Department's preliminary determination that IPRS payments are countervailable implicitly
recognizes that the exception in item (d) does not apply because item (d) clearly
encompasses the IPRS within its definition of an export subsidy.

Department's Position: We disagree with the importers and exporters. The Indian
government's decision to insulate its pig iron producers from foreign competition placed
users of domestic pig iron at a disadvantage vis-a-vis competitors abroad by raising the
price of domestic pig iron. During the review period, Indian castings exporters could have
overcome this competitive disadvantage in two days: Duty drawback and the IPRS.
Imported pig iron in India is subject to normal customs duties. Had Indian castings
exporters imported foreign pig iron for use as an input and processed it into castings for
export, they could have been exempted from the normal customs duties on pig iron by
using duty drawback, a practice acceptable under U.S. countervailing duty law and the
GATT. Alternatively, under the IPRS, the Indian government created a benchmark price for
pig iron and made cash payments to exporters based on the difference between the
benchmark price and the domestic price. These cash payments were made exclusively to
castings exporters, with the net effect being a reduction in the price of pig iron to a level
well below the price commercially available in the domestic market. The IPRS was an
instrument used by the Indian government to ameliorate the deleterious effects of
high-priced pig iron on a specific group of downstream users.
The circumstances in both Korean Nails and Taiwanese OCTG differ from those in this case.
In Korean Nails, the Korean producers of nails for export had access to wire iron from
foreign as well as domestic sources at comparable prices. Although afforded the
opportunity through tariff protection to charge high prices for wire rod used in the
manufacture of products sold domestically, POSCO (an integrated steel producer which is
largely government-owned) and other Korean producers of wire rod chose to lower their
prices to exporters of nails and compete with foreign-sourced wire rod purchased under
duty drawback. We concluded that "the different prices for purchasers do not arise from a
scheme to subsidize exports, but rather are a commercial response to a segmented market,
one segment being protected and the other fully open to foreign competition." We further
stated that "this dual pricing system reflects strictly economic motivations [of the wire rod
producers] rather than a desire of the Government of Korea (the owners of POSCO) to
subsidize nail exports" (47 FR 39552).
We noted in addition that our conclusion regarding the dual pricing system was consistent
with the principle contained in item (d). However, our decision not to countervail the
Korean pricing scheme was not made solely on the basis of item (d). Rather, our decision
was based in large part on a determination that POSCO was acting in a commercially
reasonable fashion by instituting a dual-pricing system. As support for this, we stated that
two privately-owned Korean wire rod producers also had dual-pricing systems in place.
These facts led us to conclude that the Korean government was not acting to subsidize
exports.
Similarly, in Taiwanese OCTG, we found that China Steel, a state-owned corporation and a
supplier of pipe and tube inputs, maintained a two-tiered pricing policy. Accordingly, in
determining whether China Steel's prices were preferential, we compared not only the
actual prices FEMCO (an OCTG producer) paid China Steel to the actual prices FEMCO paid
for imported coil, but we also compared the prices FEMCO paid China Steel to generally
available world market prices for coil. In doing so, we found that China Steel's prices were at
world market levels. Once again, our decision was based on a determination that China Steel
was acting in a commercially reasonable manner.
In this case, the fact pattern is different. The Steel Authority of India, Ltd. (SAIL), an
Indian government entity that supplied all of the pig iron used by the castings exporters,
did not institute a dual-pricing scheme for pig iron. Instead, the Indian government
intervened to ensure that Indian castings exporters could continue to use
domestically-sourced pig iron while pig iron producers continued to enjoy the full benefits
of tariff protection. Thus, the Indian government's decision to establish the IPRS and make
cash payments to castings producers made possible exports that otherwise would not have
occurred. Without this direct government action, castings exporters would have had to pay
the high domestic price for Indian pig iron.
The fact that the Illustrative List is incorporated into U.S. law has no bearing on our
decision. In determining whether item (d) is applicable to the identification and
measurement of an export subsidy from this type of program, we have examined the law
and its legislative history. Section 771(5) of the Tariff Act states, in relevant part: "The term
'subsidy' has the same meaning as the term 'bounty or grant' as that term is used in
section1303 * * *, and includes, but is not limited to, the following: (A) Any export subisdy
dexcribed in Annex A to the Agreement (relating to the illustrative list of export subsidies)
* * *'(emphasis added). While Congress incorporated the Illustrative List into the statu, it
did not limit the definition of export subsidy to the practices outlined in the List. The
legislative history of the Trade Agreements Act of 1979 (TAA) explains, 'The reference to
specific subsidies in the definition is not all inclusive, but rather is illustrative of practices
which are subsidies within the meaning of the word as used in the bill. The administering
authority may expand upon the list of specified subsidies consistent with the basic
definition.'S. Rep. No. 92-249, 96th Cong., 1st Sess. 85 (1979). See also Trade Agreements
Act of 1979; Statements of Administrative Action, H.R. Doc. No. 96-153, Pt. II, 96th Cong.,
1st Sess. 432 (1979). The Illustrative List is not, therefore, controlling of the identification
and measurement of export subsidies, but must be considered along with other provisions
of the sattute and its legislative history, administrative practice and judicial precedent. In
light of the foregoing reasons, the inclusion of proposed regulation 355.44(h), which
corresponds to item (d) on the List, in no way supports the importers' position. Finally,
contrary to the exporter's claim to 1979, Uruguayan Leather Apparel is not relevant to the
exception in item (d). There was no provision of hides to apparel manufacturers by the
Uruguayan government, nor did the Uruguayan government intervene to manipulate the
domestic price of hides. Uruguayan leather tanners were provided payments upon the
export of finished leather wearing apparel, and Treasury offset the amount of the payment
to the extent that it consisted of a rebate of value-added and other indirect taxes.

*1979

We consider a government program that results in the provision of an input to
exporters at a price lower than to producers of domestically-sold products to confer a
subsidy within the meaning of section 771(5) of the Tariff Act. It is irrelevant whether the
IPRS is consistent with item (d) because we are not concerned with world market prices but
with the alternative price of pig iron commercially available in the domestic market. Thus,
we determine the IPRS program to be countervailable.
An analogy to the IPRS is the case of export loans. In this case, as in many others, we have
determined that export loans at preferential interest rates constitute a subsidy. In
measuring the subsidy, we do not concern ourselves with whether firms could have
borrowed money at commercial rates in international credit markets. The fact that, as a
result of a government program, they borrowed from domestic sources at rates below those
commercially available in the domestic market leads us to determine that a subsidy is
bestowed.

Comment 2: The exporters argue that the benefit from the IPRS program is overstated,
claiming that it should be offset by the Engineering Goods Export Assistance Fund (EGEAF)
and Freight Equalization Fee (FEF) levies which are included in the price of pig iron.
Because IPRS payments include the refund of both the EGEAF and the FEF, the amounts
paid for these two levies should be deducted from IPRS receipts to determine the net
subsidy from this program.
Conversely, petitioners argue that the EGEAF and the FEF levies are not allowable offsets
under section 771(6) of the Tariff Act. These levies are included in the price of pig iron and
are paid regardless of whether the castings produced from the purchased pig iron is sold
domestically or exported.

Department's Position: We agree with petitioners. Section 771(6)(A) of the Tariff Act states
that to determine the net subsidy the Department may subtract from the gross subsidy the
amount of "any application fee, deposit, or similar payment paid in order to qualify for, or
to receive, the benefit of the subsidy *

Comment 3: The petitioners argue that a single country-wide rate should be applied to all
exporters. Section 706(a) of the Tariff Act states, in part, that "the order may provide for
differing countervailing duties," 19 U.S.C. 1671e(a) (emphasis added). Thus, Congress
created a presumption in favor of country-wide rates. The exporters add that the
Department's discretion to apply separate company-specific rates should not be exercised
because all the companies benefit from the IPRS program to the same degree. The varying
rates of subsidy attributable to the IPRS program led to the application of individual
company rates not because the companies received differing rates of benefits under the
IPRS program, but rather because the Department used IPRS payments received in 1986,
rather than the amounts claimed on 1986 exports. Therefore, it is inappropriate to assign
individual company rates solely because some companies, as a result of happenstance,
received IPRS payments during the review period that were substantially different from the
amounts claimed for exports made during the review period.
Conversely, the importers argue that the Department correctly assigned company-specific
rates, rather than a single country-wide rate. The Department is required by its regulations
to issue company-specific rates if significant differentials exist between the
weighted-average country-wide rate and individual company rates.

Department's Position: We disagree with the petitioners and the exporters. Section 607 of
the Tariff and Trade Act of 1984 establishes a statutory presumption in favor of
country-wide countervailing duty rates, with the possibility of company-specific rates if
the Department determines that a "significant differential" exists between companies
receiving subsidies benefits. 19 U.S.C. � 1671e(a)(2). Pursuant to that section, the
Department promulgated regulations to use a single weighted-average country-wide rate
unless there is a significant differential between an individual company rate and the
weighted-average country-wide rate. Under � 355.20(d)(3) of our regulations, a significant
differential is a "difference of the greater of at least five percentage points or 25 percent,
from the weighted-average net subsidy calculated on a country-wide basis." In this review,
five companies met the standard in the regulations for being significantly different;
therefore, we assigned them company-specific rates.
Regarding the exporters' argument that it is appropriate to assign company- specific rates
solely because lagged receipts of IPRS payments resulted in varying subsidies for individual
companies, the Department has consistently used receipts and not claims filed during the
review period to measure the subsidy from the IPRS program. We use receipts because they
represent a tangible measure of benefits received. Claims, on the other hand, are tenuous in
nature and have the potential to be rejected.

Comment 4: The exporters argue that it is inappropriate to calculate IPRS benefits based on
when benefits are received because, even though payment is not received for months after
shipment, the program provides known payments on a sale-by-sale basis. The Department
should calculate the benefit from the IPRS using payments claimed during the review
period, rather than payments received during the review period.
Conversely, the petitioners argues that the Department should be consistent from one
review to the next and continue to use the total amount of IPRS payments received during
the review period in calculating the benefit from this program.

Department's Position: We agree with petitioners. It has been our general practice to
compute benefits received by a firm during the review period (in this case the 1986
calendar year), and apply them to the total value of exports for the same period. There are a
few exceptions to this practice, such as when a benefit is earned on a shipment-by-shipment
basis and the exact amount of the benefit is known at the time of export (see e.g., Final
Affirmative Countervailing Duty Determination and Countervailing Duty Order;
Certain Steel Wire Nails from New Zealand (52 FR 37196; October 5, 1987)). Even if we were
to consider the IPRS such an exception, the exporters did not make such a claim when we
first determined

*1980

in the 1984 review of this order that the IPRS provided a
countervailable subsidy. In that review, we calculated the subsidy from the IPRS program
by allocating receipts over exports. The use of the lag in payments from this new program
resulted in lower benefits than would have been the case if we had measured the subsidy
based on IPRS claims during the 1984 review period. Furthermore, a shift in methodology
at this time would result in a substantial gap in the measurement of subsidies from this
program (i.e., IPRS payments claimed in 1985 but received in 1986 would be excluded from
not only 1985 but 1986 as well).

Comment 5: The petitioners argue that the Department incorrectly determined that the
benefit from the IPRS program is zero for purposes of the cash deposit of estimated
countervailing duties. While it is the Department's policy to adjust the deposit rate if a
program-wide change has taken place since the review period but prior to publication of the
preliminary results of administrative review, the exporters' renunciation of IPRS payments
on exports of the subject merchandise to the United States does not constitute a program-
wide change because it was not effectuated by an official act, statute, regulation or decree,
and the exporters could resume receiving IPRS payments if they chose.
The exporters respond that the Department verified that no exporter was permitted to
receive IPRS payments on sales to the United States of the subject merchandise and that
this change applied to all exporters without exception. The Engineering Export Promotion
Council (EEPC) issued a decree, verified by the Department, terminating IPRS payments for
exports of subject castings to the United States. The EEPC is an official body legally
sanctioned by the Indian Ministry of Commerce. A change that affects the entire program
and affects equally all exporters under that program is a program-wide change.
Accordingly, the exporters argue that the Department correctly determined that this
program-wide change meets the Department's requirements for setting a deposit rate
different from the net subsidy determined for the review period.

Department's Position: We agree with the exporters. At verification in the 1985 review, we
established that the EEPC stopped accepting any IPRS claims filed on shipments of the
subject merchandise exported to the United States after July 1, 1987. The Ministry of
Commerce has subsequently enforced the renunciation. Allowing for the normal lag of a few
months between the filing of IPRS claims and the receipt of payment, there is no evidence or
reason to believe that IPRS payments will be received by any exporters after publication of
the preliminary results. Therefore, for purposes of the cash deposit of estimated
countervailing duties, we determine the benefit from this program to be zero.

Comment 6: Exporters argue that Govind's IPRS benefits were overstated in the preliminary
determination due to the use of an incorrect denominator. Exporters state that Govind
reported IPRS benefits received on all sales, not only subject castings exported to the
United States. Therefore, the denominator should reflect all sales of castings to the United
States as well as other countries.

Department's Position: We agree and have adjusted the denominator for purposes of the
final calculations.

Comment 7: Petitioners argue that, given the fungible nature of pig iron in the production of
castings and the possibility of claim-shifting by producers, producers may receive indirect
IPRS benefits on the production of non-subject castings. Therefore, petitioners argue that
these benefits should be included in the calculation of the countervailable benefits.
Petitioners liken the IPRS rebates on non-subject castings to direct tax benefits--just as the
Department determines the taxes a firm otherwise would have paid absent the existence of
the tax subsidy, the Department should determine the price the respondents otherwise
would pay for pig iron incorporated into subject castings, absent the subsidy on
non-subject castings.
Respondents argue that non-subject castings are outside the scope of the order and that the
Department has no authority to impose countervailing duties on such castings.
Respondents continue by stating that petitioners' methodology is premised on the
assumption that claims on non-subject castings could be doubled, which was not supported
by the findings at verification in the 1985 review. Respondents argue that the IPRS is a
rebate upon export and does not constitute a reduction of a company's liabilities.
Importers agree with respondents and argue that the statute only allows for the assessment
of duties "upon importation of such articles or merchandise which have benefitted from the
bounty or grant, whether directly or indirectly." Therefore, importers argue that the
Department has no authority to countervail goods that are similar to goods being
subsidized, but which do not benefit themselves. Furthermore, importers state that �
355.47(b) of the proposed regulations does not provide for fungibility arguments with
respect to countervailable benefits, and that this is consistent with the Department's
practice.

Department's Position: We disagree with petitioners. The scope of the order does not cover
the castings in question. As such, any IPRS rebates allegedly received on non-subject
castings are not countervailable with respect to this order.

Comment 8: Petitioners state that the Department incorrectly used the average domestic
pig iron price as best information available (BIA) to calculate Super Castings' and Govind's
CCS benefit amount. Petitioners argue that both companies failed to report the information
requested by the Department, necessary to calculate the companies' respective average pig
iron price during the review period. Therefore, petitioners argue that these companies
should not be rewarded for their failure to comply and that the Department should use as
BIA, the overrebate amount found in the administrative review period for January 1, 1982
to December 31, 1982, the most recent review in which an overrebate was found under this
program.
Exporters argue that BIA should not be used for Govind and Super Castings because these
companies have not been uncooperative. Furthermore, in calculating these companies' tax
incidence the Department used BIA and found that there was no overrebate.

Department's Position: We agree with exporters. Super Castings and Govind were not
uncooperative in this review. Therefore, we have not altered our treatment from the
preliminary determination of the CCS program with respect to these two companies.

Comment 9: Exporters argue that the CCS program did not provide an overrebate to Select
Steels. As an exporter, Select Steels does not have access to the tax incidence information
on inputs requested by the Department in its questionnaire. Exporters state that the
Department should have requested additional clarification if this was unclear. In addition,
exporters state that the Department's use of BIA in the previous review was inconsistent
with that at the preliminary in this review because BIA in the 1985 review was the tax
incidence for all other companies which was higher than five percent. Therefore, exporters
argue that the Department should determine that Select Steels did not receive a

*1981

countervailable subsidy from an overrebate of the CCS.
Importers agree with exporters and argue that Select should not receive a BIA rate if the
Department failed to request clarification of information on the record. Furthermore,
importers argue that Select's BIA rate should not be included in the calculation in the "all
others" rate since the Department has found, in the last three reviews, that there was no
overrebate.
Including Select's BIA rate in the calculation of the "all others" rate would unnecessarily
penalize other companies.

Department's Position: We have reviewed the information on the record and the
clarification provided in the exporters' case brief. Based on this information and based on
the calculation of a benefit amount using the average domestic price of one metric tonne of
pig iron, we find, as for Govind and Super Castings, that Select does not receive an
overrebate.

Comment 10: Exporters argue that there is a clerical error in the calculation of the tax
benefits for Uma and Commex which should be corrected at the final.

Department's Position: We agree and have recalculated Uma and Commex's tax benefits for
purposes of the final.

Comment 11: Exporters argue that the denominator used in calculating the benefit from
pre-shipment loans for Govind was incorrect. Exporters state that the denominator used for
purposes of the preliminary results reflected only Govind's sales of the subject castings to
the United States while the loan data provided was for exports of all castings, not only
subject castings.

Department's Position: We agree and have adjusted the denominator to reflect exports to
the United States of all castings.

Comment 12: Petitioners state that adjustment for RSI's cost of ECGC insurance in the
preliminary results was incorrect, because the premium does not meet the criteria for an
allowable offset and because it was disallowed in the previous review.
Exporters argue that the insurance premium is a legitimate offset because the premium
increases the cost of the financing to the Indian exporter.
Importers concur that the insurance premium is an allowable offset because it represents a
cost of obtaining financing.

Department's Position: We have again reviewed the information
on the record and have reconsidered the position taken in the preliminary results. As a
result, we have disallowed the insurance premium as an offset. Verification in the 1985
review established that the insurance fee is a risk premium. Section 771(6)(A) of the Act
defines those fees that may be considered offsets and they do not include risk premiums.

Comment 13: Petitioners state that the Department should use BIA to calculate Select Steels'
pre-shipment financing benefit because the company failed to submit requested
information to the Department. As a result, petitioners argue that the Department made
certain incorrect assumptions when calculating the benefit. Therefore, Select Steels should
not be rewarded for its failure to comply and the Department should calculate the benefit
based on BIA, which is the lowest reported preferential borrowing rate available during the
review period.
Exporters argue that Select borrows on a revolving line of credit and that the information
provided the Department was sufficient to permit the calculation of Select's interest
expense.

Department's Position: We agree with exporters and have not altered our
treatment of Select's pre-shipment financing for the final.

Comment 14: Petitioners state that the Department should correct a clerical error made in
calculating the net central excise tax amount for two companies under the CCS program.
Department's Position: We agree with petitioners and have made the adjustment.

Final Results of Review

After reviewing all of the comments received, we determine that the following net subsidies
exist for the period January 1, 1986 through December 31, 1986:

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Manufacturer/exporter Net ad valorem subsidy (percent)
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R.B. Agarwalla and Company ....................................... 17.34
Crescent Foundry Co. Pvt. Ltd..................................... 18.07
Govind Steel Co. Ltd............................................. 180.23
Kejriwal Iron and Steel Works .................................... 44.85
Select Steels .................................................... 17.64
All Other Manufacturers or Exporters ............................. 25.50
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The Department will instruct the Customs Service to assess countervailing duties at the
above percentages of the f.o.b. invoice price on shipments of the subject merchandise
exported on or after January 1, 1986, and on or before December 31, 1986.
As a result of the termination of benefits attributable to the IPRS program, the Department
will also instruct the Customs Service to collect the cash deposits of estimated
countervailing duties for the following, on shipments of this merchandise entered, or
withdrawn from warehouse, for consumption on or after the date of publication of these
final results of administrative review:

This administrative review and notice are published in accordance with section 751(a)(1) of
the Tariff Act (19 U.S.C. 1675(a)(1)) and 19 CFR 355.22.
Dated: January 14, 1991.

Eric I. Garfinkel,

Assistant Secretary for Import Administration.

[FR Doc. 91-1311 Filed 1-17-91; 8:45 am]

BILLING CODE 3510-DS-M